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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-29 · 335 added, 265 removed, 711 unchanged (46% of the section changed)

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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.”

Our Results of Operations discussion and analysis presents a review for the years ended December 31, 2024, 2023 and 2022, and year-over-year comparisons between these years.

For a discussion of our 2022 results of operations, including year-over-year comparison to the year ended December 31, 2021, refer to Part I, Item 7 of our Annual Report on Form 10-K, which was filed with the SEC on February 27, 2023.

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

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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

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As of December 31, 2024 and December 31, 2023, our reserves, net of reinsurance, and average crediting rate on our fixed rate annuities were $6 billion and 5%, respectively, and $6 billion and 4%, 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.

Conversely, a rise in average yield on our investment portfolio would increase earnings if the average interest rate we pay on our products does not rise correspondingly.

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.

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 “ Part I.

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We believe that the aging of the U.S.

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

population will increase the demand for our indexed annuity 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.

Over 10,000 people will turn 65 each day in the United States over the next 15 years, and according to the U.S.

Census Bureau, the proportion of the U.S.

population over the age of 65 is expected to grow from 18% in 2023 to 21% in 2035.

We serve a growing retirement population, with more than 10,000 Americans turning 65 every day and a projected 23% increase in people age 65 and older over the next 25 years.

The impact of this growth may be offset to some extent by asset outflows as an increasing percentage of the population begins withdrawing assets to convert their savings into income.

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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.

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.

For example, the fixed index annuity market grew from nearly $12 billion of sales in 2002 to $97 billion of sales in 2023 and the registered index-linked annuities (“RILA”) market grew from $11 billion of sales in 2018 to $44 billion of sales in 2023.

Additionally, this market demand has positively impacted the IUL market as it has expanded from $100 million of annual sales in 2002 to $3 billion of annual sales in 2023.

Critical Accounting Policies and Estimates

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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.

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.

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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”).

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

Our aggregate reserves for contractholder funds, FPBs and MRBs on a direct and net basis as of December 31, 2024 and December 31, 2023, are summarized as follows (in millions):

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Reinsurance Recoverable Net

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

Indexed annuities $ 31,002 $ (861) $ 30,141

Fixed rate annuities 17,443 (11,009) 6,434

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Reinsurance Recoverable Net

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

Indexed annuities $ 27,809 $ (17) $ 27,792

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

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Total $ 56,251 $ (8,960) $ 47,291

FIA and IUL products contain an embedded derivative;

Indexed annuities and IUL products contain an embedded derivative;

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 Operations.

The indexed annuities/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 Operations.

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”).

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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 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 income (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).

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However, we are largely protected by collateral arrangements with counterparties when individual counterparty exposures exceed certain thresholds.

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

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 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.

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”).

The fair values of the embedded derivatives in our indexed annuities 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.

The discount rate used to determine the fair value of our indexed annuities/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, 2024 and December 31, 2023, our non-performance risk adjustment was based on the expected loss due to default in debt obligations for similarly rated financial companies.

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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.

For arrangements reinsuring indexed annuities products, the funds withheld account additionally contains an embedded derivative representing the index credit obligation due the reinsurer, resulting in a compound embedded derivative.

These compound embedded derivatives are

reported in Funds withheld for reinsurance liabilities and for all other arrangements, 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.

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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, 2023 and 2022.

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, 2024 and December 31, 2023, dollars in millions.

As of December 31, 2024

(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

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:

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As of December 31, 2023

(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

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:

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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.

In certain reinsurance transactions, the underlying risks ceded to a reinsurer contain MRBs.

MRBs, inclusive of reinsured 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.

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.

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.

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

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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.

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.

Next, we perform a qualitative analysis at the reporting unit level to determine whether there are any events or circumstances that would indicate it is more likely than not that the fair value of our recorded goodwill exceeds its carrying value.

As of December 31, 2024 and December 31, 2023, goodwill was $2,179 million and $1,749 million.

The goodwill was recorded in connection with the recent owned distribution acquisitions and the FNF Acquisition.

In evaluating the recoverability of goodwill, we perform a qualitative analysis at the reporting unit level to determine whether there are any events or circumstances that would indicate it is more likely than not that the fair value of our recorded goodwill exceeds its carrying value.

Based on the results of this analysis, an annual goodwill impairment test may be completed based on an analysis of the discounted future cash flows generated by the underlying assets.

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

For the years ended December 31, 2024 and December 31, 2023, 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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We must then assess the likelihood that deferred income tax assets will be realized and, to the extent we believe that realizability is not likely, establish a valuation allowance.

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.

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.

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

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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.

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

These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone.

In setting the features and pricing of our flagship FIA products relative to our targeted net margin, we take into account our expectations regarding (1) the difference between the net investment income we earn and the sum of the interest credited to policyholders and the cost of hedging our risk on the policies;

The PRT solutions business is supported by an experienced team, and we partner with brokers and institutional consultants for distribution.

These markets leverage our existing team's spread-based capabilities as well as our strategic partnership with Blackstone ISG-I Advisors LLC (“Blackstone”).

Additionally, we have expanded our owned distribution strategy with majority and minority ownership stakes in a number of IMOs, providing a diversified source of earnings while generating a meaningfully higher risk adjusted return on capital than retained business.

Owned distribution further strengthens our relationships with key partners and with industry consolidation underway, we believe we are uniquely positioned to partner as a distribution consolidator.

For our minority owned interests, our Consolidated Statements of Operations reflects dividend income in Interest and investment income.

For our majority owned interests, unaffiliated commission revenue is recorded in Owned distribution revenue and unaffiliated expenses are recorded in Personnel costs and Other operating expenses in our Consolidated Statements of Operations.

In setting the features and pricing of our flagship indexed annuity products relative to our targeted net margin, we take into account our expectations regarding (1) the difference between the net investment income we earn and the sum of the interest credited to policyholders and the cost of hedging our risk on the policies;

(2) fees, including surrender charges and rider fees, partly offset by vesting bonuses that we pay our policyholders;

and (3) a number of related expenses, including benefits and changes in reserves, acquisition costs, and general and administrative expenses.

and (3) a number of

related expenses, including benefits and changes in reserves, acquisition costs, and general and administrative expenses.

On March 16, 2022, FNF announced its intention to partially spin off F&G through a dividend to FNF shareholders.

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Key Components of Our Historical Results of Operations

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.

Through our insurance subsidiaries, we issue a broad portfolio of deferred annuities (indexed annuities 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.

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.

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.

As defined by the 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.

Under GAAP, premium collections for deferred annuities (indexed annuities 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.

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

We purchase derivatives consisting predominantly of call options and, to a lesser degree, futures contracts (specifically for FIA contracts) on the equity indices underlying the applicable policy.

These derivatives are used to offset the reserve impact of the index credits due to policyholders under the FIA and IUL contracts.

The majority of all such call options are one-year options purchased to match the funding requirements underlying the FIA/IUL contracts.

We attempt to manage the cost of these purchases through the terms of our FIA/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained.

The call options and futures contracts are marked to fair value with the change in fair value included as a component of net investment gains (losses).

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.

We purchase derivatives consisting predominantly of equity options and, to a lesser degree, futures contracts (specifically for indexed annuity contracts) on the equity indices underlying the applicable policy.

These derivatives are used to offset the reserve impact of the index credits due to policyholders under the indexed annuity and IUL contracts.

The majority of all such equity options are one-year options purchased to match the funding requirements underlying the indexed annuity/IUL contracts.

We attempt to manage the cost of these purchases through the terms of our indexed annuity/IUL contracts, which permit us to change caps, spread, or participation rates on each policy's annual anniversary, subject to certain guaranteed minimums that must be maintained.

The equity options and futures contracts are marked to fair value with the change in fair value included as a component of net investment gains (losses).

The change in fair value of the equity 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 2023, we began to execute pay-float and receive-fixed interest rate swaps.

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 (inclusive of reinsured 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.

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 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).

Reinsured MRBs are valued using a methodology consistent with direct MRBs, with the exception of the non-performance spread which reflects the credit of the reinsurer.

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 indexed annuity/IUL policies, which includes the expenses incurred to fund the index credit with respect to indexed annuities/IULs.

Proceeds received upon expiration or early termination of equity 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 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”),

flow reinsurance fee income from allocating capital to the highest returning retained business while enhancing cash flow and generating fee-based earnings,

owned distribution margin generated from a meaningfully higher risk adjusted return on capital than retained business and providing a diversifying source of earnings while further strengthening our relationships with key partners, and

through our disciplined expense management 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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Managing 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, involves the ability to maximize returns on our AUM and minimize risks such as interest rate changes and defaults or impairment of investments.

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.

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 indexed annuities/IULs.

We analyze returns on AAUM to measure our profitability.

F&G reinsures portions of its policy risks with other insurance companies.

The use of indemnity reinsurance does not discharge an insurer from liability on the insurance ceded.

The insurer is required to pay in full the amount of its insurance liability regardless of whether it is entitled to or able to receive payment from the reinsurer.

The portion of risks exceeding F&G's retention limit is reinsured.

F&G primarily seeks reinsurance coverage in order to manage loss exposures, to enhance our capital position, to diversify risks and earnings, and to manage new business volume.

F&G follows reinsurance accounting when the treaty adequately transfers insurance risk and any acquisition cost reimbursements reduce policy acquisition costs deferred and maintenance expense reimbursements reduce direct expenses incurred.

Otherwise, F&G follows deposit accounting if there is inadequate transfer of insurance risk or if the underlying policy for which risk is being transferred is an investment contract that does not contain insurance risk.

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

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.

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.

Our non-GAAP measures may not be comparable to similarly titled measures of other organizations because other organizations may not calculate such non-GAAP measures in the same manner as we do.

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Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are provided within.

Adjusted Net Earnings

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) to eliminate:

Adjusted Net Earnings Attributable to Common Shareholders

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

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

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

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(iii) Purchase price amortization:

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);

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

(iv) Transaction costs:

the impacts related to acquisition, integration and merger related items;

(v) Other “non-recurring,” “infrequent” or “unusual items”:

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) Income taxes:

(v) Other and “non-recurring,” “infrequent” or “unusual items”:

Other adjustments include removing any charges associated with U.S.

guaranty fund assessments as these charges neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance, but result from external situations not controlled by the Company.

Further, 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) Non-controlling interest on non-GAAP adjustments:

the portion of the non-GAAP adjustments attributable to the equity interest of entities that F&G does not wholly own;

(vii) 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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However, we believe the adjustments made to net earnings (loss) in order to derive adjusted net earnings provide an understanding of our overall results of operations.

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.

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.

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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 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.

Amounts attributable to the fair value accounting for derivatives hedging the indexed annuities 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 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 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.

Adjusted Return on Assets attributable to Common Shareholders

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

Return on assets is comprised of net investment income, less cost of funds, flow reinsurance fee income, owned distribution margin 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 as well as other liability costs.

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Assets Under Management (“AUM”)

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;

AUM is comprised of the following components and is reported net of reinsurance assets ceded in accordance with GAAP:

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

(ii) investments in unconsolidated affiliates at carrying value;

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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

Average Assets Under Management (“AAUM”)

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.

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Management believes that presentation of sales, as measured for management purposes, enhances the understanding of our business and helps depict longer term trends that may not be apparent in the results of operations due to the timing of sales and revenue recognition.

Total Equity excluding AOCI

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, 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.

Total F&G Equity attributable to common shareholders, excluding AOCI

Total F&G equity attributable to common shareholder, excluding AOCI is based on total F&G Annuities & Life, Inc.

shareholders' equity excluding the effect of AOCI and preferred stocks, including additional paid-in-capital.

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 be useful internally and for investors and analysts to assess the level of return driven by the Company that is available to common shareholders.

Yield on AAUM

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

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

Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.

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The results of operations for the years ended December 31, 2024, 2023 and 2022 were as follows (in millions):

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

Year ended December 31,

2024 2023 2022

Life insurance premiums and other fees $ 2,860 $ 2,413 $ 1,704

Interest and investment income 2,719 2,211 1,655

Owned distribution revenues 81 — —

Recognized gains and (losses), net 84 (124) (1,010)

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Income tax expense 136 23 158

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

Earnings from discontinued operations, net of tax — — 8

Net earnings (loss) 642 (58) 635

Non-controlling interests 3 — —

Net earnings (loss) attributable to F&G 639 (58) 635

Preferred stock dividend 17 — —

Net earnings (loss) attributable to F&G common shareholders $ 622 $ (58) $ 635

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

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

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

Year ended December 31,

2024 2023 2022

Indexed annuities ("FIA/RILA") $ 6,729 $ 4,699 $ 4,550

Fixed rate annuities ("MYGA") 5,105 5,066 3,744

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IUL 166 156 127

Funding agreements 1,256 1,443 2,310

Funding agreements ("FABN/FHLB") 1,020 1,256 1,443

PRT 2,242 1,976 1,390

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Net sales $ 10,571 $ 9,238 $ 9,006

• 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.

• Total annuity sales were higher during the years ended December 31, 2024 and 2023, 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 new FABN and FHLB agreements, were lower for the years ended December 31, 2024 and 2023, 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, 2024 and 2023, reflecting the timing of PRT transactions that are also subject to fluctuation period to period.

During the year ended December 31, 2024, we closed 12 pension risk transfer transactions.

Since entering the pension risk transfer market in 2021

through December 31, 2024, we have closed 32 transactions involving approximately 115,000 plan participants and resulting in over $7 billion cumulative plan transaction value from inception.

• Sales attributable to flow reinsurance to third parties were higher during the years ended December 31, 2024 and 2023, primarily reflecting the addition of new reinsurance, the higher level of MYGA sales, 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).

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 indexed annuity 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 Operations for the respective periods (in millions):

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

Year ended December 31,

2024 2023 2022

Life-contingent pension risk transfer premiums $ 2,217 $ 1,964 $ 1,362

Traditional life insurance premiums 19 15 18

Life-contingent immediate annuity premiums 24 18 13

Traditional life insurance and life-contingent immediate annuity premiums 35 43 33

Surrender charges 268 103 58

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Life insurance premiums and other fees $ 2,860 $ 2,413 $ 1,704

• 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.

• Life-contingent pension risk transfer premiums increased for the years ended December 31, 2024 and 2023, reflecting the timing of PRT transactions.

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

• Surrender charges increased for the years ended December 31, 2024 and 2023, primarily reflecting increases in withdrawals from policyholders with surrender charges and market value adjustments (“MVAs”), primarily on our indexed annuities policies.

The increase in termination activity is primarily due to the higher interest rate environment.

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.

• Policyholder fees and other income increased for the years ended December 31, 2024 and 2023, primarily due to increased cost of insurance charges, net of changes in unearned revenue liabilities (“URL”) on IUL policies from growth in business and higher guaranteed minimum withdrawal benefit (“GMWB”) rider fees.

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):

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

Year ended December 31,

2024 2023 2022

Fixed maturity securities, available-for-sale $ 2,181 $ 1,843 $ 1,431

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

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

Year ended December 31,

2024 2023 2022

AAUM $ 51,574 $ 46,044 $ 40,069

Yield on AAUM 4.78 % 4.13 % 5.80 %

Yield on AAUM (at amortized cost) 5.27 % 4.80 % 4.13 %

• AAUM was higher for the years ended December 31, 2024 and 2023, 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.

• Interest and investment income was higher for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to $266 million from invested asset growth, $49 million from returns on alternative investments and $193 million of all other rate and mix impacts.

Owned Distribution Revenues

Below is a summary of owned distribution revenues (in millions):

Year ended December 31,

2024 2023 2022

Owned distribution revenues $ 81 $ — $ —

• Owned distribution revenues represent commissions received by our majority owned distribution partners generated from third-party annuity and life insurance sales.

Override and bonus commissions are recognized as revenue at the effective date of each policy sold under a contract.

Owned distribution revenues for the year ended December 31, 2024 represent revenues associated with the 2024 acquisitions of Roar and PALH, and primarily reflect commission revenues.

Recognized Gains and (Losses), Net

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

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

Year ended December 31,

2024 2023 2022

Net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets $ 76 $ (111) $ (461)

Change in allowance for expected credit losses (34) (37) (34)

Net realized and unrealized (losses) gains on certain derivatives instruments 147 (857) 615

Net realized and unrealized gains (losses) on certain derivatives instruments 70 147 (857)

Change in fair value of reinsurance related embedded derivatives (32) (128) 352

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Recognized gains and (losses), net $ 84 $ (124) $ (1,010)

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), net 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.

Recognized gains and (losses) attributable to these agreements, and thus excluded from the totals in the table above, was $(30) million, $(123) million and $381 million for the years ended December 31, 2024, 2023 and 2022, respectively.

• For the year ended December 31, 2024, net realized and unrealized gains (losses) on fixed maturity available-for-sale securities, equity securities and other invested assets is primarily the result of unrealized fair value option gains on owned distribution investments and mark-to-market gains on our preferred and equity securities.

• 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.

• 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 and changes in the fair value of interest rate swaps.

• For all periods, net realized and unrealized gains (losses) on certain derivative instruments primarily relate to the net realized and unrealized gains (losses) on equity options and futures used to hedge indexed annuity and IUL products, including gains on option and futures expiration and changes in the fair value of interest rate swaps.

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 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.

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:

Realized (losses) gains $ (216) $ (170) $ 437

• 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 (equity options) and dynamic (long futures contracts) instruments in our product hedging strategy.

Equity options and futures contracts are generally based upon the performance of various equity indices, such as the S&P 500 Index, as well as other bond and gold market indices.

We 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 annuities, universal life products and floating rate investments are summarized in the table below (in millions):

Year ended December 31,

2024 2023 2022

Equity options:

Realized gains (losses) $ 220 $ (216) $ (170)

Change in unrealized (losses) gains (75) 308 (692)

Futures contracts:

(Losses) gains on futures contracts expiration 7 (6) 9

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

Interest rate swaps 48 — —

Foreign currency forward:

Gains on foreign currency forward (2) 11 10

Gains (losses) on futures contracts expiration 24 7 (6)

Change in unrealized (losses) gains (6) 2 (1)

Interest rate swap (losses) gains (103) 48 —

Other derivative investments

Gains (losses) on other derivative investments 10 (2) 12

Total net change in fair value $ 70 $ 147 $ (857)

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Secured Overnight Financing Rates 4.49 % 5.38 % 4.30 %

• 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.

Gains (losses) on option expiration reflect the movement during each period on options settled during the respective period.

• The change in unrealized gains (losses) due to fair value of call options is primarily driven by the underlying performance of the S&P 500 Index during each respective period relative to the S&P 500 Index on the policyholder buy dates.

• 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.

• Realized gains and (losses) on certain derivative instruments are directly correlated to the performance of the indices upon which the equity 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.

• The changes in unrealized gains (losses) due to the net changes in fair value of equity options and futures contracts are driven by the underlying performance of the indices, such as the S&P 500 Index, upon which the equity options and futures contracts are based during each respective period relative to the respective indices on 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:

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

Year ended December 31,

2024 2023 2022

Average Crediting Rate 4 % 1 % 1 %

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3 year high water mark 3 % 8 % 13 %

• Actual amounts credited to contractholder fund balances may differ from the index appreciation due to contractual features in the FIA contracts and certain IUL contracts (caps, spreads and participation rates), which allow us to manage the cost of the options purchased to fund the annual index credits.

• Actual amounts credited to contractholder fund balances may differ from the index appreciation due to contractual features in the indexed annuity contracts and certain IUL contracts (caps, spreads and participation rates), which allow us to manage the cost of the options purchased to fund the annual index credits.

• The credits for the periods presented were based on comparing the S&P 500 Index on each issue date in the period to the same issue date in the respective prior year periods.

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

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

Year ended December 31,

2024 2023 2022

PRT agreements $ 2,310 $ 2,016 $ 1,399

FIA/IUL market related liability movements 588 (1,010) (377)

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

Indexed annuities/IUL market related liability movements (221) 588 (1,010)

Index credits, interest credited and bonuses 1,696 831 593

Other changes in policy reserves 6 118 144

Total benefits and other changes in policy reserves $ 3,791 $ 3,553 $ 1,126

• 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.

• PRT agreements increased for the years ended December 31, 2024 and 2023 reflecting the timing of PRT transactions.

PRT transactions are subject to fluctuation period to period.

• The indexed annuities/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 increased (decreased) the indexed annuities market related liability by approximately $(203) million, $106 million and $(656) million during the years ended December 31, 2024, 2023 and 2022, respectively.

The remaining changes in market value of the market related liability movements for all periods were primarily driven by equity market impacts.

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 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.

• During the third quarter of 2024 and for the year ended December 31, 2024, based on policyholder behavior, experience and interest rate movements, we reflected updates to surrender assumptions for recent and expected near term policyholder behavior, as well as updated certain FIA assumptions used to calculate the fair value of the embedded derivative component within contractholder funds.

These changes resulted in decreases in total benefits and other changes in policy reserves of approximately $89 million for the year ended December 31, 2024.

• During the third quarter and for the year ended December 31, 2023, based on increases in interest rates and pricing changes, we updated certain indexed annuities 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.

• During the fourth quarter of 2022, based on increases in interest rates and pricing changes during 2022, we updated certain indexed annuities 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 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.

• Index credits, interest credited and bonuses were higher for the years ended December 31, 2024 and 2023, primarily reflecting higher index credits and interest credited on indexed annuities and other policies as a result of market movement during the respective periods and higher interest credited associated with the growth in PRT agreements.

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

Year ended December 31,

2024 2023 2022

Market risk benefit (gains) losses $ (25) $ 95 $ (182)

• 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.

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

Market risk benefit (gains) losses are reported net of reinsurance, reflecting an amended reinsurance agreement effective during the year ended December 31, 2024.

• Changes in market risk benefit (gains) losses for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily reflect more favorable market related movements and favorable actual policyholder behavior as compared to expected.

• 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):

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

Year ended December 31,

2024 2023 2022

Amortization of DAC, VOBA and DSI $ 495 $ 382 $ 300

Amortization of other intangible assets and fixed asset depreciation 74 30 24

Total depreciation and amortization $ 569 $ 412 $ 324

• 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.

Amortization of DAC, VOBA and DSI increased for the years ended December 31, 2024 and 2023, primarily reflecting increased DAC and DSI associated with the growth of the business.

In addition, as a result of our annual actuarial assumption update process, amortization rates on some DAC and DSI balances increased primarily for indexed annuities.

Amortization of VOBA also increased approximately $15 million for the year ended December 31, 2024, reflecting other actuarial model updates and refinements.

• Amortization of other intangible assets and fixed asset depreciation for the year ended December 31, 2024 included amortization of other intangible assets from our majority owned interests in Roar and PALH.

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

Year ended December 31,

2024 2023 2022

Personnel costs $ 296 $ 232 $ 157

Other operating expenses 203 146 102

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.

Total personnel costs and other operating expenses $ 499 $ 378 $ 259

• Personnel costs and other operating expenses increased for the years ended December 31, 2024 and 2023, reflecting costs in line with the growth in sales and assets along with continued investments in our operating platform.

In addition, the year ended December 31, 2024 includes $39 million from our majority owned interests in Roar and PALH, $26 million related to the change in fair value of contingent consideration and $19 million of guaranty fund assessments.

Interest expense

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

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

Year ended December 31,

2024 2023 2022

Interest expense $ 132 $ 97 $ 29

Total interest expense $ 132 $ 97 $ 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.

• Interest expense increased for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily reflecting interest on the debt issuances in December 2023, June 2024, and October 2024, partially offset by lower interest resulting from a partial repayment of the 5.5% F&G Notes in June 2024 and lower balances on the revolving credit facility.

Other Items Affecting Net Earnings

Income tax expense (benefit)

Income Tax Expense

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

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

Year ended December 31,

2024 2023 2022

Earnings (loss) before taxes $ 778 $ (35) $ 793

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

Income tax (benefit) expense before valuation allowance 150 (12) 131

Change in valuation allowance (14) 35 27

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The effective tax rate was 17% and (66)%, respectively, for the years ended December 31, 2024 and December 31, 2023.

The effective tax rate for the year ended December 31, 2024 differs from the statutory rate of 21% primarily due to favorable permanent adjustments and valuation allowance release on unrealized losses and capital loss carryforwards.

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):

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

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

The table below shows the adjustments made to reconcile Net earnings (loss) attributable to common shareholders to Adjusted net earnings attributable to common shareholders (in millions):

Year ended December 31,

2024 2023 2022

Net earnings (loss) attributable to common shareholders $ 622 $ (58) $ 635

Non-GAAP adjustments:

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Purchase price amortization 84 22 21

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

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 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.

• 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.

Transaction costs, other and non-recurring items 16 3 10

Non-controlling interest (10) — —

Income taxes adjustment 21 (104) 104

Adjusted net earnings attributable to common shareholders $ 546 $ 335 $ 353

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

• Adjusted net earnings of $546 million for the year ended December 31, 2024 included $514 million of investment income from alternative investments and $46 million of CLO redemptions and bond prepay income, and $14 million tax valuation allowance, partially offset by $26 million of net expense from actuarial assumption and model updates and other items.

Alternative investments investment income based on management’s long-term expected return of approximately 10% was $659 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 $558 million.

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

Alternative investments net investment income based on management’s long-term expected return of approximately 10% was $236 million.

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

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

• 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.

Investment Portfolio

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Asset-backed securities 10,270 17 8,929 17

Collateral loan obligations ("CLO")

Collateral loan obligations

5,379 9 5,405 10

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Residential mortgage loans 2,916 5 2,545 5

Other (primarily derivatives and company owned life insurance) 1,697 3 % 809 2 %

Other (primarily derivatives, company owned life insurance and unconsolidated owned distribution investments) 1,753 3 1,697 3

Short term investments 2,410 4 1,452 3

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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.

The NAIC determines ratings for non-agency Residential Mortgage-backed Securities (“RMBS”) and commercial mortgage-backed securities 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).

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.

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December 31, 2024 December 31, 2023

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

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

AAA/AA/A 1 $ 31,258 $ 29,174 63 % $ 28,052 $ 26,170 65 %

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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, 2024 and 2023 (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, 2024

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Diversified financial services 4,271 9

Banking 2,048 5 %

Whole loan collateralized mortgage obligation 2,635 6

Municipal 1,600 4 %

Banking 1,988 4

Insurance 1,761 4

Municipal 1,363 3

Electric 1,229 3

Telecommunications 696 2 %

Pharmaceuticals 738 1

Total $ 34,765 74 %

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Banking 2,048 5

Insurance 1,545 5 %

Whole loan collateralized mortgage obligation 2,043 5

Municipal 1,600 4

Whole loan collateralized mortgage obligations 1,278 4 %

Insurance 1,567 4

Electric 1,086 3

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Total $ 31,056 77 %

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.

The amortized cost and fair value of fixed maturity AFS securities by contractual maturities as of December 31, 2024 (dollars in millions), are shown below.

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

December 31, 2023 December 31, 2022

Amortized Cost Fair Value Amortized Cost Fair Value

Corporate, Non-structured Hybrids, Municipal and U.S.

December 31, 2024

Amortized Cost Fair Value

Corporate, Non-structured Hybrids, Municipal, Foreign and U.S.

Government securities:

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As of December 31, 2024, the CLO and ABS positions were trading at a net unrealized gain position of $92 million and a net unrealized loss of $207 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.

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.

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 position of $344 million, respectively.

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS ABS portfolio at December 31, 2024 and 2023 (dollars in millions) .

December 31, 2024 December 31, 2023

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Total $ 10,270 100 % $ 8,929 100 %

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.

The following table summarizes the credit quality by NRSRO rating, or NAIC designation equivalent, of our AFS CLO portfolio at December 31, 2024 and 2023 (dollars in millions).

December 31, 2024 December 31, 2023

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Municipal Bond Exposure

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.

The following table summarizes our municipal bond exposure as of December 31, 2024 and 2023 (dollars in millions).

December 31, 2024 December 31, 2023

Amortized Cost Fair Value Amortized Cost Fair Value

General obligation bonds $ 247 $ 205 $ 269 $ 232

Special revenue bonds 1,329 1,128 1,507 1,335

Certificate participations 16 13 — —

Total $ 1,592 $ 1,346 $ 1,776 $ 1,567

Across all municipal bonds, the largest issuer represented 5% of the category and less than 1% of the total portfolio for both December 31, 2024 and 2023, and is rated NAIC 1 as of December 31, 2024.

Our focus within municipal bonds is on NAIC 1 rated instruments, with 97% and 98% of our municipal bond exposure rated NAIC 1 as of December 31, 2024 and 2023, respectively.

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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.

As of December 31, 2024 and December 31, 2023, our mortgage loans on real estate portfolio had a weighted average DSC ratio of 2.3 times, and a weighted average LTV ratio of 57% and 55%, 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, 2023 and 2022, we had no CMLs that were delinquent in principal or interest payments and none in the process of foreclosure.

At December 31, 2024, we had one CML that was delinquent in principal or interest payments compared to none at December 31, 2023.

At December 31, 2024 and 2023, we had no CMLs 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.

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We diversify our RML portfolio by state to attempt to reduce concentration risk.

RMLs have a primary credit quality indicator of either a performing or nonperforming loan.

We define nonperforming RMLs as those that are 90 or more days past due and/or in nonaccrual status.

Loans are placed on nonaccrual status when they are over 90 days delinquent.

RMLs have a primary credit quality indicator of either a performing or non-performing loan.

We define non-performing RMLs as those that are 90 or more days past due and/or in non-accrual status.

Loans are placed on non-accrual status when they are over 90 days delinquent.

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.

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The gross unrealized loss position on the fixed maturity available-for-sale fixed and equity portfolio was $3,837 million and $3,691 million as of December 31, 2024 and 2023, respectively.

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

Most components of the portfolio exhibited price depreciation caused by higher treasury rates as opposed to issuer specific credit concerns.

The total amortized cost of all securities in an unrealized loss position was $29,405 million and $29,741 million as of December 31, 2024 and 2023, respectively.

The average market value/book value of the investment category with the largest unrealized loss position was 81% for services, media and other as of December 31, 2024.

In the aggregate, services, media and other represented 23% of the total unrealized loss position as of December 31, 2024.

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 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.

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, 2024 and 2023, were as follows (dollars in millions):

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At December 31, 2024, our watch list included 120 securities in an unrealized loss position with an amortized cost of $1,579 million, no allowance for expected credit losses, unrealized losses of $517 million and a fair value of $1,062 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, 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.

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

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.

There were 45 and 101 structured securities with a fair value of $146 million and $316 million, respectively to which we had potential credit exposure as of December 31, 2024 and 2023, respectively.

Our analysis of these structured securities, which included cash flow testing, resulted in allowances for expected credit losses of $62 million and $35 million as of December 31, 2024 and 2023, respectively.

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AFS Securities

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.

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, 2024 and 2023, 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 on Form 10-K.

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

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

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

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We reduce the negative interest cost associated with cash collateral posted from counterparties under various ISDA agreements by reinvesting derivative cash collateral.

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 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.

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Our principal sources of cash flow from operating activities are annuity considerations, insurance premiums, and fees and investment income.

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 $5,999 million and $5,834 million for the years ended December 31, 2024 and 2023, respectively.

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These sources of liquidity and cash flow support the general corporate needs of the holding company, interest and debt service, funding acquisitions and investment in core businesses.

Our cash flows associated with collateral received from and posted with counterparties change as the market value of the underlying derivative contract changes.

As the value of a derivative asset declines (or increases), the collateral required to be posted by our counterparties would also decline (or increase).

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 2, 2024, F&G acquired a 70% majority ownership stake in the equity of Roar Joint Venture, LLC (“Roar”).

Roar wholesales life insurance and annuity products to banks and broker-dealers through a network of agents.

Total initial consideration is comprised of cash of approximately $269 million and contingent consideration.

Under the terms of the purchase agreement, the Company has agreed to make cash payments of up to approximately $90 million over a 3 year period upon the achievement of certain earnings before interest, taxes, depreciation and amortization (“EBITDA”) milestones of Roar.

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”).

Net proceeds from the investment have been used to support the growth of F&G’s assets under management.

Under the terms of the agreement, FNF agreed to invest $250 million in exchange for 5,000,000 shares of 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.

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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.

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 was extended by approximately two years from November 22, 2025 to November 22, 2027.

Total borrowing availability increased from $665 million to $750 million.

Pricing and advance rates remain unchanged.

Financial covenants also remain essentially the same.

As noted below, we used $365 million of net proceeds from our 6.250% F&G Notes to pay off the Credit Agreement.

As of December 31, 2024, the balance of the Credit Agreement was $0 and the borrowing capacity was $750 million.

On June 4, 2024, F&G completed its public offering of $550 million aggregate principal amount of its 6.50% Senior Notes due 2029 (the “6.50% F&G Notes”).

The 6.50% F&G Notes are guaranteed on an unsecured, unsubordinated basis by each of F&G’s subsidiaries that are guarantors of F&G’s obligations under its existing credit agreement.

A portion of the net proceeds were used to finance a cash tender offer by its wholly owned subsidiary Fidelity & Guaranty Life Holdings, Inc.

(“FGLH”) for an aggregate principal amount of $250 million of FGLH’s 5.50% Senior Notes due 2025 (the “5.50% F&G Notes”).

On July 18, 2024, F&G acquired a 100% ownership stake in the equity of PALH, LLC (“PALH”).

PALH markets and sells life insurance and annuity products of various insurance carriers to individuals through a network of agents.

Prior to the acquisition date, PALH owned a 70% ownership stake in an operating company of which F&G owned 30% equity.

Total consideration of approximately $314 million is comprised of cash of $215 million, settlement of a prepaid asset of $8 million, acquisition date fair value of the previously held interests of $92 million, net of $1 million cash acquired.

On October 4, 2024, F&G completed its public offering of its 6.250% Senior Notes due 2034 with the aggregate principal amount of $500 million (the “6.250% F&G Notes”).The 6.250% F&G Notes are guaranteed on an unsecured, unsubordinated basis by each of F&G’s subsidiaries that are guarantors of F&G’s obligations under its existing credit agreement.

A portion of the net proceeds were used to pay off the outstanding balance of $365 million on the Company’s revolving credit facility.

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.

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.

For the year ended December 31, 2024, we paid common and preferred dividends of approximately $121 million.

On November 6, 2024, our Board of Directors declared a quarterly cash dividend of $0.8594 per share on the FNF Preferred Stock for the period from October 15, 2024 to and excluding January 15, 2025, which was paid on January 15, 2025, to FNF Preferred Stock record holders on January 1, 2025.

On February 20, 2025, our Board of Directors declared a quarterly cash dividend of $0.22 per common share, payable on March 31, 2025, to F&G common shareholders of record as of March 17, 2025.

On February 20, 2025, our Board of Directors also declared a quarterly cash dividend of $0.8594 per share on the FNF Preferred Stock for the period from January 15, 2025 to and excluding April 15, 2025, to be paid on April 15, 2025, to FNF Preferred Stock record holders as of April 1, 2025.

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.

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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.

In 2023, F&G’s Board of Directors approved a three-year stock repurchase program, under which the Company may repurchase up to $50 million of F&G common stock.

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.

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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.

No shares were repurchased pursuant to the program during the year ended December 31, 2024, compared to approximately 869,000 shares for a total cost of approximately $18 million with an average cost per share of $21.07 for the year ended December 31, 2023.

At December 31, 2024, the total remaining authorization of F&G common stock that may be repurchased was approximately $32 million.

As of December 31, 2024 and 2023, we had cash and cash equivalents of $2,264 million and $1,563 million, respectively, and short term investments of $2,410 million and $1,452 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 ” ).

As of December 31, 2024 we had $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, 2024 or 2023.

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.

The FNF Credit Facility matures October 29, 2025, or when the Revolving Credit Facility described above is terminated, whichever occurs first.

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 revolving credit facility or the FNF Credit Facility.

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As discussed below, our insurance subsidiaries are restricted by state regulation and other laws in their ability to pay dividends and make distributions.

As of December 31, 2023, approximately $4.2 billion of our net assets were restricted from dividend payments without prior approval from the relevant departments of insurance.

The maximum dividend permitted by law is not necessarily indicative of an insurer’s actual ability to pay dividends, which may be constrained by business and regulatory considerations, such as the impact of dividends on surplus, which could affect an insurer’s ratings or competitive position, the amount of premiums that can be written and the ability to pay future dividends.

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The insurance laws of Iowa and New York regulate the amount of dividends that may be paid in any year by FGL Insurance and FGL NY Insurance, respectively.

In 2024, FGL Insurance did not pay dividends to its parent, Fidelity & Guaranty Life Holdings, Inc.

FGL Insurance’s maximum ordinary dividend capacity for 2025 is $0.

FGL NY Insurance has historically not paid dividends.

Under the laws of the State of Vermont, Raven Re and Corbeau Re cannot pay dividends out of, or other distribution with respect to, capital or surplus, without prior approval.

Likewise, the insurance laws of Bermuda limit the maximum amount of annual dividends and distributions that may be paid or distributed by F&G Life Re without prior regulatory approval and those of the Cayman Islands require that, among other things, F&G Cayman Re maintain minimum levels of statutory capital, surplus and liquidity, meet solvency standards, submit to periodic examinations of its financial condition and restrict payments of dividends and reductions of capital.

Please refer to “ Item 1.

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.

Business - Regulation of F&G ” of Part I of this Annual Report on Form 10-K and Note O - Insurance Subsidiary Financial Information and Regulatory Matters to the Consolidated Financial Statements included in Part II - Item 8 of this Annual Report on Form 10-K, for additional details on risk-based capital, statutory capital and dividend and other distribution payment limitations.

Cash Flow from our Operations

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Cash used in investing activities for the years ended December 31, 2024 and 2023 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.

Cash used in investing activities for the year ended December 31, 2024 also included net cash outflows of $482 million for the Roar and PALH acquisitions.

Financing Cash Flows.

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, 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.

Our cash flows provided by financing activities for the years ended December 31, 2024, 2023, and 2022 were $2,655 million, $3,687 million and $5,626 million, respectively and reflected lower net contractholder deposits for the years ended December 31, 2024 and 2023.

Contractholder account deposits and withdrawals in 2024 included FABN issuances of approximately $600 million and withdrawals of $820 million as compared to no FABN issuances and withdrawals of $53 million for 2023.

In addition, cash provided by financing activities for the year ended December 31, 2024 included borrowing proceeds of $1,050 million, portions of which were used to finance a $250 million cash tender offer on the 5.50% F&G Notes and for net revolving credit facility repayments of $365 million, and proceeds of $250 million from the issuance of the FNF Preferred Stock, all discussed above, partially offset by dividend payments of approximately $121 million.

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

Financing Arrangements.

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.

At December 31, 2024, we had outstanding:

• $300 million aggregate principal amount of 5.50% F&G Notes,

• $500 million aggregate principal amount of our 7.40% Senior Notes due 2028 (the “7.40% F&G Notes”),

• $345 million aggregate principal amount of our 7.95% Senior Notes due 2053 (“the 7.95% F&G Notes”),

• $550 million aggregate principal amount of its 6.50% F&G Notes, and

• $500 million aggregate principal amount of our 6.250% F&G Notes.

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:

The Credit Agreement imposes significant operating and financial restrictions, including financial covenants, and the Credit Agreement and the indentures governing the 6.250% F&G Notes, 6.50% F&G Notes, 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, 2024, we were in compliance with all covenants.

Subsequent Events.

On January 13, 2025, F&G completed its public offering of its 7.300% Junior Subordinated Notes due 2065 with an aggregate principal amount of $375 million (the “7.300% F&G Notes”).

F&G intends to use the net proceeds of this offering for general corporate purposes, including the repurchase, redemption or repayment at maturity of outstanding indebtedness.

On February 1, 2025, F&G redeemed the outstanding $300 million aggregate principal amount of its 5.50% senior notes due May 1, 2025.

Obligations - Contractual and Other.

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Total $ 8,886 $ 8,808 $ 9,954 $ 9,697 $ 8,672 $ 55,953 $ 101,970

Please refer to Note E - Reinsurance to the Consolidated Financial Statements in Part II - Item 8 of this Annual Report on Form 10-K for additional information on our reinsurance.

Preferred and Equity Security Investments.

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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, 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, 2024 and 2023, we had $2,852 million and $2,514 million, respectively, in FHLB non-putable funding agreements included under contractholder funds on our Consolidated Balance Sheets.

As of December 31, 2024 and 2023, we had assets with a fair value of approximately $4,289 million and $4,345 million, respectively, which collateralized the FHLB funding agreements.

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

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

Collateral-Derivative Contracts.

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Market value fluctuations are due to changes in interest rates, spreads and other risk factors.

Our cash flows associated with collateral received from and posted with counterparties change as the market value of the underlying derivative contract changes.

As the value of a derivative asset declines (or increases), the collateral required to be posted by our counterparties would also decline (or increase).

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).

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”).

Our 2024 issuances of the 6.250% F&G Notes and 6.50% F&G Notes and the 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.

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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

Year ended December 31,

Summarized Statement of Operations:

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Income tax (expense) benefit 3 (1)

Net earnings (loss) $ (100) $ (22)

2023 December 31,

Net loss $ (44) $ (100)

Summarized Balance Sheet:

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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