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DATE

Thursday, May 7, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Christopher Owsley Blunt
  • President — Conor Ernan Murphy

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TAKEAWAYS

  • Assets Under Management (AUM) -- Gross AUM reached nearly $75 billion, representing an 11% increase; retained AUM was $56 billion, up 3%, excluding $1.8 billion reinsured with the sale of FG Life Re.
  • Adjusted Net Earnings -- $110 million, or $0.82 per share; included a $5 million unfavorable significant item related to investment and income true-up adjustments.
  • Sales Performance -- Gross sales totaled $3.2 billion, with core sales at $2 billion (up 11%) and opportunistic sales at $1.2 billion (up 9%); net sales were $2.2 billion, reflecting flow reinsurance.
  • Fixed Income Yield -- 4.77%, down 16 basis points relative to 2025, driven by the removal of assets associated with the sale of FG Life Re, lower floating-rate yields, lower preferred stock dividends, and timing-based investment expense adjustments.
  • Portfolio Credit Quality -- 97% of fixed maturities investment grade; credit-related impairments were three basis points for the quarter and have averaged six basis points over five years.
  • Fee-Based Income -- Flow reinsurance fee income grew to $16 million (from $13 million), and owned distribution margin contributed $9 million (from $7 million).
  • Operating Expense Efficiency -- Operating expense to AUM before reinsurance fell to 48 basis points from 50 basis points at 2025 year end and 60 basis points at 2024 year end; management targets 45 basis points by year end 2027.
  • Capital Return to Shareholders -- $67 million returned, including $38 million in dividends and $29 million for repurchase of 1.2 million shares at an average price of $24.14.
  • Share Repurchase Authorization -- Existing $50 million program had $3 million remaining as of March 31, 2026; a new $100 million, three-year repurchase program was authorized effective March 13, 2026.
  • Adjusted Return on Equity (ROE) Excluding AOCI -- 8.4% for the quarter; management notes an additional 3.4% would result from using long-term alt investment return assumptions and excluding significant items.
  • Adjusted Return on Assets (ROA) -- 76 basis points for the quarter, 87 basis points on a last twelve-month basis; management attributes about two-thirds of the sequential yield decline to timing, with one-third likely permanent.
  • Alternative Investment Portfolio -- $4 billion remains classified as alternatives; annualized alternative return was 8.3%, up from 7.8% sequentially; long-term expected return guidance raised to 12%-14%.
  • Private Origination and Lending -- $11 billion in private origination, with 90% investment grade; $5 billion in middle market corporate lending, 89% of which is investment grade.
  • Owned Distribution ("Peak Altitude") -- Approximately $700 million deployed, generating $80 million of annual EBITDA; company initiated a formal process to explore strategic alternatives for Peak with an expectation of continued participation.
  • Debt and Leverage -- $2.3 billion in total debt; annualized interest expense of $165 million at a 7% blended yield; maintained debt-to-capitalization target at approximately 25% (excluding AOCI).
  • Risk-Based Capital (RBC) Ratio -- Estimated company action level RBC ratio maintained above the 400% target; management describes impact from NAIC's CLO capital charge proposal as limited to a five-point decrease in RBC or less.
  • Fee-Based Earnings Mix Outlook -- Fee-based strategies made up 15% of adjusted net earnings, excluding significant items, in 2025, with the mix expected to reach approximately 25% by year end 2028.

SUMMARY

Management confirmed gross AUM growth of 11%, marking a record level for the company and a compound annual growth rate of 18% since 2019. Adjusted net earnings reached $110 million and were shaped by asset growth, higher reinsurance fees, and disciplined expense management, with minimal credit-related impairments providing further support to portfolio stability. The company announced a new $100 million share buyback program, supplementing prior authorizations nearly exhausted by recent repurchases at an average price well below current market levels. The business mix continued to evolve toward increased fee-based income, as demonstrated by the proportional rise in flow reinsurance and owned distribution, supporting a targeted improvement in ROE and long-term capital efficiency.

  • Blunt said, "we have initiated a formal process to explore strategic alternatives for Peak to capture its significant growth opportunities and unlock that value for our shareholders," clarifying potential for a transaction but also confirming, through Murphy, continued participation regardless of structure.
  • Murphy indicated that monetizing Peak could provide incremental capital at the holding company, with initial deployment priorities likely including debt reduction and further AUM growth.
  • Blunt stated, "We view AUM as our primary metric to track the top line growth of our business as sales volumes may fluctuate year to year depending on opportunities and returns," distinguishing AUM's role as the central measure over sales.
  • The updated definition of alternative investments resulted in a shift of $6 billion into fixed income, and raised long-term return assumptions for the remaining alternatives to a 12%-14% range.
  • Software exposure in the private origination segment was disclosed at about 20%, with management emphasizing short loan duration and limited near-term disruption risk.
  • Fee-based model migration is expected to accelerate internal capital generation and decrease dependency on spread-based earnings moving forward.

INDUSTRY GLOSSARY

  • AOCI: Accumulated Other Comprehensive Income; represents unrealized gains and losses excluded from net income, frequently adjusted for in insurance financial reporting.
  • CLO: Collateralized Loan Obligation; a pooled security backed by a diversified portfolio of loans, often referenced in insurer investment portfolios.
  • Flow Reinsurance: Ongoing, contract-based reinsurance covering new business as it is originated, as opposed to block reinsurance of existing portfolios.
  • Peak Altitude ("Peak"): F&G Annuities & Life, Inc.'s owned insurance distribution franchise under current strategic review.
  • Sidecar: A dedicated vehicle used to provide third-party capital to support (re)insurance or investment activities on an on-demand basis.
  • RBC Ratio: Risk-Based Capital Ratio; regulatory metric used to assess an insurer’s capital adequacy based on its risk profile.
  • 144A Private Placement: Privately placed securities sold under SEC Rule 144A, typically to qualified institutional buyers, absent public registration.
  • IUL: Indexed Universal Life Insurance; permanent life insurance tied to an equity index, offering flexible premiums and cash value growth.

Full Conference Call Transcript

Christopher Owsley Blunt: The first quarter was a solid start to the year and in line with our expectations. Today, I will share some highlights of the business as well as details of our investment portfolio and capital allocation. Then I will turn it over to Conor to cover results in more detail. Starting with business highlights, from a top line perspective, F&G Annuities & Life, Inc. has consistently grown AUM in recent years. We have generated strong free cash flow and reinvested it back into the business, driving our diversification and accelerating our growth that has brought AUM before reinsurance to nearly $75 billion at the end of the first quarter, an 18% compound annual growth rate since 2019.

Today, F&G Annuities & Life, Inc. is a recognized market leader across multiple products and distribution channels with a strong strategic foothold in large and growing markets. The retirement landscape is creating a powerful and lasting demand for our business. The peak '65 retirement wave is driving unprecedented demand for guaranteed income and growth solutions, with more than 4 million Americans turning age 65 every year through 2027, at a rate of 11 thousand people per day. This structural tailwind is fueling industry sales in the U.S. across retail indexed annuities, indexed universal life, and pension risk transfer, which are our core product lines. Industry results are more mixed for our opportunistic products.

Funding agreement-backed notes reached record industry issuance last year, while the multiyear guaranteed annuity market began to normalize in the fourth quarter as consumers felt less urgency to lock in rates following the interest rate movements earlier last year. As F&G Annuities & Life, Inc. navigates the competitive landscape, we are focused on disciplined sales growth and capital allocation priorities between core and opportunistic sales to power our AUM growth. We view AUM as our primary metric to track the top line growth of our business as sales volumes may fluctuate year to year depending on opportunities and returns. Having reached a meaningful level of scale, our focus has shifted to continuing to improve margins and expand ROE.

We are intentionally shaping our product mix, managing our sales volumes, and utilizing flow reinsurance to capture the highest return opportunities and deliver sustainable long-term value while growing AUM. From a bottom line perspective, we have intentionally diversified our business over the last five years across our spread and fee-based strategies. This diversification further reinforces the durability of our business model and it supports more predictable and higher quality earnings as well as expanded returns over time. For our spread-based business, we have a long and proven track record across varying interest rate environments, including the current landscape where credit spreads remain near historical lows despite recent volatility. Our approach is straightforward and disciplined.

We source attractive, stable, and surrender charge-protected liabilities. We source high-quality assets with a deep understanding of our liabilities to achieve well-matched asset and liability cash flows, and we have a clear line of sight to investment returns, actively managing our new business pricing and in-force renewals to maintain spreads. The result is a stable cost of crediting aligned to our expanding in-force book that generates steady long-term growth in spread-based earnings over time. This is complemented by the increased earnings contribution from our fee-based strategies, including flow reinsurance, owned distribution, and middle market life insurance. These strategies are higher margin, less capital intensive, and positioned to generate higher returns and valuation over time.

In 2025, fee-based strategies represented approximately 15% of our adjusted net earnings, excluding significant items, and we expect that mix to grow to approximately 25% by year-end 2028. As the mix shifts, we believe ROE will become the most important return measure for our business reflecting the higher quality and capital efficiency of our growing earnings base. Next, shifting to our investment portfolio, our $53 billion retained investment portfolio is well diversified and performing very well. The retained portfolio is high quality with 97% of fixed maturities being investment grade.

I will walk through some highlights of our five primary asset classes as shown on slide 26 in our spring investor presentation, including fixed income, public structured, private origination, mortgage loans, and alternative investments. First, our traditional liquid fixed income portfolio is $18 billion, or 34% of the total retained portfolio. This portfolio is anchored in high-grade public bonds and traditional Rule 144A private placement securities.

Next, our public structured portfolio is $11 billion, or 21% of the total retained portfolio, and provides access to well-diversified and high-quality assets across three categories, including $5 billion in CMBS and non-agency RMBS focused on stable property types with built-in structural protections, $5 billion in CLOs that are well diversified across industries, issuers, and managers, with a focus on investment grade tranches and ample par subordination, and $1 billion in high-quality ABS that is well diversified by collateral type. As an aside, we view the NAIC's proposal for higher capital charges on CLOs invested in broadly syndicated loans as very manageable.

After properly adjusting for funds-withheld reinsurance assets, the effect of the proposal for our CLO portfolio would translate to a decrease in RBC of five points or less as a conservative estimate. Next, our private origination portfolio is $11 billion, 21% of the total retained portfolio. Private origination is a key component of our investment strategy. It provides enhanced yield while limiting additional credit risk, as well as diversification and strong covenant protection. Our private origination portfolio is well diversified and includes corporate and commercial lending, consumer loans, real estate, and other real asset exposures.

From a ratings perspective, approximately 90% of the private origination debt portfolio is investment grade and included within the 97% investment grade for our total fixed income portfolio. We primarily use the top five nationally recognized statistical rating organizations. Nearly 90% of the private origination debt portfolio and 94% of the rated assets in our total fixed income portfolio are rated by at least one of the top five rating agencies. Further, 64% of our total fixed income portfolio is dual rated by two rating agencies, with at least one being one of the big three.

Egan-Jones ratings are de minimis at less than 1% of our total retained portfolio, and private letter ratings account for approximately 8% of our total retained portfolio and undergo the same analytical rigor as public ratings. When it comes to private asset origination, most of these are directly originated asset classes that have historically been underwritten by commercial banks and have a long performance history over multiple market cycles, providing observable data for thorough underwriting. Here, we utilize Blackstone's best-in-class origination, underwriting, and structuring teams to source high-quality pools of physical and financial assets.

The combination of Blackstone's structuring talent, our ability to complement Blackstone's ability with other asset managers, the track record of these assets, and our thorough due diligence has helped generate attractive risk-adjusted returns for F&G Annuities & Life, Inc. that have performed very well to date and through stress environments like the COVID pandemic. Recent headlines have been focused on middle market lending to midsized corporations. I would like to provide further details on this subset of our private origination portfolio. Middle market corporate lending is nearly $5 billion, or 9% of the total retained portfolio. Eighty-nine percent of our middle market lending positions are investment grade. We have low loan-to-value ratios and strong structural subordination.

We are lending to sizable, high-quality companies with average annual EBITDA over $200 million. We have a track record of near-zero credit losses, and the upgrade-to-downgrade ratio is positive for our private origination corporate exposure. Next, our mortgage loan portfolio is $7 billion, 13% of the total retained portfolio. It is weighted toward defensive sectors with two-thirds in residential loans and the remainder in commercial loans concentrated in multifamily and industrial properties, two segments that have demonstrated resilience across varying economic conditions. Finally, our alternatives portfolio is $4 billion, or approximately 7% of the total retained portfolio. This includes approximately $3 billion of limited partnerships and $1 billion of other equity interests.

Under our updated definition of alternative assets discussed last quarter, we have reclassified approximately $6 billion of lower-yielding, debt-like assets into our fixed income portfolio. As a result of this updated definition, we have revised our long-term expected return assumption from 10% to a range of 12% to 14% for the remaining LP and equities portfolio. Many of these alternative investments are still in the earlier phases of their value creation cycle, so we are not yet fully realizing the long-term expected returns. During the first quarter, we saw improvement in our annualized return at 8.3%, up from 7.8% in the sequential quarter.

Next, with regard to our overall portfolio, our fixed income yield was 4.77% in the first quarter, in line with 2025. Relative to 2025, our yield decreased 16 basis points as a result of four items in the first quarter: the removal of the assets associated with our sale of FG Life Re, lower yields on floating-rate assets, lower preferred stock dividends due to seasonality, and an investment expense true-up adjustment. These were largely one-time items or due to timing. Excluding these items, we maintained our core spread in line with the fourth quarter. As a reminder, our fixed income yield excludes alternative investment income as well as variable investment income, which we define as prepayment fees.

Software exposure across the total retained portfolio is below 5% and relatively short duration. The vast majority of our software positions are protected by high switching costs, large competitive moats, regulatory barriers, and/or embedded in workflows that are difficult to disrupt. We believe this exposure is very manageable. Credit-related impairments have remained low and stable, averaging six basis points over the past five years. Through the first quarter, credit-related impairments were a modest three basis points. Portfolio credit quality has improved over time through implementation of de-risking programs. Since 2020, we have selectively repositioned over $2 billion of assets to optimize, de-risk, and position the portfolio to perform in varying market conditions while also improving credit quality.

We believe our portfolio is performing exceptionally well, as expected, and conservatively positioned to withstand economic downturns. Now turning to the liability side of our balance sheet and how we think about the intrinsic value of our business, F&G Annuities & Life, Inc. reported GAAP equity excluding AOCI of $6.2 billion at quarter end and has grown its book value per share excluding AOCI to $46.51, up 70% since the 2020 FNF acquisition. We think about our business as three distinct and complementary value-creating components: our new business platform, our profitable in-force block, and our capital-light fee-based strategies. Each contributes meaningfully to earnings, and together, they support a compelling sum-of-the-parts valuation.

At the core of our business is a high-quality and profitable in-force book that delivers steady spread income on a growing AUM base. We do not have any problematic legacy blocks of business. Our GAAP net reserves of $55 billion are diversified across $37 billion of retail fixed annuities, $8 billion of pension risk transfer liabilities, and $7 billion of funding agreements. In addition, our $3 billion index universal life in-force book is less capital intensive than our annuity business and generates significant recurring product fee income annually. This is a top-10 IUL franchise with strong positioning in the cultural middle market that has demonstrated above-average growth rates.

F&G Annuities & Life, Inc. is also uniquely positioned to provide flow reinsurance to third parties and through our sidecar, a capital-efficient strategy that generates fee-based returns. Demand for reinsurance capacity has greatly increased in recent years, and we have reinsured over $15 billion of cumulative annuity new business. Our own distribution franchise, Peak Altitude, rounds out the picture. With approximately $700 million deployed into this business and approximately $80 million in annual EBITDA, we believe the value of Peak is not fully appreciated by the market or reflected in our current share price.

As a result, we have initiated a formal process to explore strategic alternatives for Peak to capture its significant growth opportunities and unlock that value for our shareholders. Importantly, each of these components—our new business platform, our profitable in-force block, and our capital-light fee-based strategies—represent a distinct and measurable source of value. Taken together, we believe the sum-of-the-parts framework reveals meaningful value that is not yet fully reflected in F&G Annuities & Life, Inc.'s current market valuation, and we remain focused on closing that gap.

Next, turning to capital allocation, during the first quarter, F&G Annuities & Life, Inc. returned $67 million of capital to shareholders through $38 million of common and preferred dividends, and $29 million to repurchase approximately 1.2 million shares of common stock at an average price of $24.14. The company's existing stock repurchase authorization permits aggregate repurchases of up to $50 million, of which approximately $3 million remained available as of 03/31/2026. Effective 03/13/2026, our Board of Directors authorized an additional new three-year share repurchase program under which F&G Annuities & Life, Inc. may repurchase up to $100 million of common stock. Our Board views repurchasing shares at current levels as a compelling use of capital.

Despite the progress we have made to increase our outstanding float through stock distribution at year end, buying back shares at current prices reflects our confidence in the results we have delivered and our conviction in the significant long-term opportunities ahead. I will now turn the call over to Conor Ernan Murphy to provide further details on F&G Annuities & Life, Inc.'s first quarter highlights.

Conor Ernan Murphy: Thank you, Chris. This morning, I will provide some additional details of our earnings, asset growth, and other performance drivers, as well as our strong capital position. Starting with earnings, on a reported basis, adjusted net earnings were $110 million, or $0.82 per share in the first quarter. Alternative investment income was $44 million, or $0.32 per share, below management's long-term expected return for the quarter. Adjusted net earnings included an unfavorable significant item totaling $5 million, or $0.03 per share, from investment and other income true-up adjustments. As Chris mentioned, effective 01/01/2026, our presentation of investment income for alternative investments does not include fixed income assets. Prior periods are presented on a comparable basis to reflect the new definition.

We believe this updated definition more appropriately delineates between the fixed income portfolio and alternative investments, while also improving comparability to others in the industry. Importantly, this updated definition does not have any impact to adjusted net earnings on an as-reported basis. Please see page 42 in our spring investor presentation for further details. Overall, as compared to the prior year, adjusted net earnings reflect retained asset growth, growing fees from accretive flow reinsurance, steady owned distribution margin, and operating expense discipline driving scale benefit. First quarter results were in line with our expectation, and our core spread remained consistent with 2025.

With regard to asset growth, we achieved record gross AUM of nearly $75 billion, up 11% over $67 billion for 2025. Retained AUM was $56 billion for the first quarter, up 3% over $55 billion for the prior year quarter. The current period excludes a $1.8 billion in-force block reinsured with the sale of the FG Life Re legal entity effective 03/01/2026. F&G Annuities & Life, Inc. reported gross sales of $3.2 billion for the first quarter, up 10% over $2.9 billion for 2025. This includes core sales of $2 billion for the first quarter, up 11% over 2025. This reflects higher core retail indexed annuity and indexed universal life sales and pension risk transfer sales.

This also includes $1.2 billion of opportunistic sales for the first quarter, up 9% over 2025. This reflects $1 billion of funding agreements, in line with the prior year, and $200 million of multiyear guaranteed annuities which we intentionally moderated to allocate capital to the highest return opportunities. F&G Annuities & Life, Inc.'s net sales were $2.2 billion in the first quarter. This reflects flow reinsurance, in line with capital targets for multiyear guaranteed annuities and fixed indexed annuities. The first quarter showcased the diversity of our new business engine, allowing us to flex across our products and channels to source the most attractive liabilities in the current environment to grow AUM.

Next, turning to fee-based earnings, our fee income from accretive flow reinsurance was $16 million for the first quarter, as compared with $13 million in 2025. Our fee income from owned distribution margin contributed $9 million for the first quarter as compared with $7 million in 2025. Next, turning to scale benefit, as F&G Annuities & Life, Inc. grows, we are benefiting from increased scale, as our ratio of operating expense to AUM before reinsurance decreased to 48 basis points at quarter end, benefiting from higher AUM and due in part to favorable timing of expenses. This compares with 50 basis points at year-end 2025, and 60 basis points at the end of 2024.

As AUM grows and we continue to manage expenses, we expect the operating expense ratio to improve to approximately 45 basis points by year-end 2027, for a cumulative 15 basis point, or 25%, improvement over the three-year period. From a return perspective, our reported results include short-term fluctuations from alternative investment income. As reported, adjusted ROE excluding AOCI was 8.4% for the first quarter. As reported, adjusted ROA was 76 basis points for the quarter and 87 basis points on a last twelve month basis, which was in line with full year 2025.

Taking into consideration management's long-term expected return for alternative investments, and the unfavorable significant item, would have resulted in 3.4% of additional ROE and 34 basis points of additional ROA for the quarter. Turning to our strong capital position, we remain committed to our long-term target of approximately 25% debt to capitalization, excluding AOCI, and expect that our balance sheet will naturally delever over time. We continue to target holding company cash and invested assets at two times interest coverage. Our annualized interest expense is approximately $165 million, or roughly a 7% blended yield on the $2.3 billion of total debt outstanding. We expect to maintain our estimated Company Action Level risk-based capital, or RBC, ratio above our 400% target.

Importantly, F&G Annuities & Life, Inc. maintains strong capitalization and financial flexibility. We conservatively manage to the most stringent capital requirements of our regulators and four rating agencies. As a reminder, F&G Annuities & Life, Inc. remains a U.S.-domiciled company. We are a full U.S. taxpayer and all new business is originated in our U.S. subsidiaries. Our majority shareholder is FNF, a U.S.-domiciled business regulated by Florida, and is also a full U.S. taxpayer. To build on Chris's earlier comments, I would like to provide some added perspective on capital allocation. Our business is built around a diversified and self-funding capital model designed to support growth and reward shareholders without relying on any single source.

This is an important part of our story. I want to take a moment to walk through both where our capital comes from and how we put it to work. We have multiple reliable sources of capital supporting our business. Our in-force generates approximately $1 billion from the existing book of business. We expect even stronger capital generation in the future as we rapidly move toward a more fee-based, higher margin, and less capital intensive business model. Our reinsurance sidecar provides $1 billion of on-demand third-party capital that we can access without diluting shareholders. Our strategic flow reinsurance partnerships add another layer of flexibility, allowing us to adjust retained sales levels and support cash from operations as we grow.

Our statutory excess capital provides additional capital strength, in line with our ratings. And as the balance sheet continues to delever, our available debt capacity will only grow over time. We deploy capital across top priorities, starting with interest and dividends. We fund our $165 million of annual interest expense and are committed to our $135 million of annual common stock dividend that we have consistently increased over time, as well as our $17 million of annual preferred stock dividend. We also invest for strategic growth. That means reinvesting in our core business to drive continued AUM expansion and selectively pursuing acquisitions to strengthen our owned distribution strategy.

And finally, as Chris discussed earlier, we launched opportunistic share repurchases during the first quarter and have over $100 million of authorization remaining at March 31. Taken together, our capital allocation reflects the financial strength and flexibility we have built and our confidence in the future. To bring it all together, as I look ahead to the remainder of the year, our focus is clear: grow our core revenues and earnings, expand ROE, and create long-term shareholder value. On the top line, we are focused on growing assets under management with an optimized sales mix that maximizes return on capital.

For our core retail products, we expect indexed annuity and indexed universal life sales growth to track in line with the strong industry trend Chris outlined earlier. In pension risk transfer, the pipeline remains strong, and we expect annual sales between $1.5 billion to $2 billion. For our opportunistic products, we are pleased to have completed a $750 million funding agreement-backed note issuance in early January; market conditions were particularly attractive and we will continue to monitor that market closely. We expect multiyear guaranteed annuity sales to continue moderating given the current rate environment. Beyond AUM growth, we remain focused on three additional priorities. First, generating additional scale benefits as our business continues to grow.

Second, expanding returns on equity excluding significant items while maintaining our return on assets, excluding significant items, in a corridor around our current level. And third, continuing our evolution toward a more fee-based, higher margin, and less capital intensive business model, a natural advantage of our position as one of the largest sellers of annuities and life insurance in the industry. This concludes our prepared remarks. I will now turn the call back to our Operator for questions.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question is from Analyst with Raymond James. Please state your question.

Analyst: Hey, good morning. Excited to be covering you. This is a bit of a housekeeping item, but do you consider 1Q26 EPS a good intermediate-term run rate off which you can continue to grow, and should we largely expect EPS to grow along with AUM over time given share repurchases are a relatively small part of the equation? Thanks.

Conor Ernan Murphy: Yes, thank you for your coverage and your interest. I would say probably, if I think about near term, just talking about the next few quarters here, but broadly speaking, that is true. I break it down: if we get into maybe the core fixed income yield, it is probably down a few basis points from things that are actual rate-related and so on in the market, and we will manage that core spread maintenance. There will be maybe a tiny bit of a lag effect there. But we also saw some green shoots on the outside. My view on the mixed income core spread is timing aside, it will be pretty close.

Maybe it will tick down a little bit. We will see how surrenders will be in the industry. They are staying relatively close to where they have been, so that should probably be there. Their alts could be a little bit lighter. We will see. The core reinsurance and owned distribution should continue to move along nicely and grow up a little bit. The expense number, we are very focused on getting that full 25% reduction from where we started a little over a year ago. I would argue that is maybe a little too good this quarter; some of that is timing.

All in all, I think, broadly speaking, this is around the range with the big unknown being how will the alts portfolio do. Right now, we have been assuming longer-term return in this new definition with the LP and equity portfolio of 12% to 14%. We have been planning a number below that for capital purposes, just so that if that does not happen quite so soon, we are not in a hole with that. Hopefully that answers your question. I am happy to clarify any component you would like me to.

Christopher Owsley Blunt: And, this is Chris. The only thing I would add to what Conor said is I do think what you said is broadly true. Obviously we see opportunity to expand ROE over time due to owned distribution. As we continue to move down this capital-light path and reinsure more assets, that obviously has a very positive and accretive impact on ROE. Historically, it would track AUM very tightly. It will diverge, I would think positively, as we go forward because of those other two sources of fee-based income.

Analyst: Do you see opportunities to take advantage on the asset side? Spreads have widened in some asset classes, but are you still kind of remaining conservative given spreads are still overall tight? Thanks.

Christopher Owsley Blunt: Yes, we have been. There are pockets. Mortgages, a good example, particularly on the residential side, are still attractive on a return-on-capital basis. So that is an area. You have seen opportunities in some of the asset-backed lending area, but those are much more opportunistic and idiosyncratic as opposed to something that you have a steady flow pipeline into. But I think as a general rule, this feels like a good environment to keep a little dry powder and stay a bit conservative.

Conor Ernan Murphy: And I would add, we remain thoughtful and active on the portfolio. We will take advantages, again, of something that will lead to a higher yield, but it takes a little time before you get the full benefit of that through the portfolio. The other thing I would say we are constantly monitoring is how the capital charges might be changing on the margin for different asset classes, and because that is just a constant marginally, we will do some capital pressure weighing. So we do some rotating here and there to help balance that factor as well.

Analyst: If I can sneak one more in, it seems surrender charge income remains similar to last quarter's or recent quarters. Has the environment remained similar? And what are you seeing from policyholders in terms of surrender behavior?

Christopher Owsley Blunt: Yes, I think there is a little bit of seasonality that we have seen. This is maybe the third year in a row where first quarter is a little weak. Just keep in mind, the policies that get processed in the first quarter are activity from the fourth quarter. As you get into the holidays, it is not most clients' preference to spend their holidays with their insurance agent talking about moving policies. So, so far it has followed as a fairly similar pattern. Then you get into the nuances of which policies are being surrendered early, what is surrender charge income, but I would say pretty consistent.

Conor Ernan Murphy: Mathematically, from a modeling perspective, it is remarkably consistent when you compare this quarter with both last quarter and the first quarter of last year. I do not expect it to necessarily go up from here. I think it is possible that it could move down, fewer surrenders in the industry, for what it is worth. April, I would say, has been a consistent month as well. So it has not shifted. I might be mildly surprised by that, but not much.

Analyst: Okay. Thank you.

Operator: Our next question comes from Mark Douglas Hughes with Truist Securities. Please state your question.

Mark Douglas Hughes: Thank you. Good morning.

Conor Ernan Murphy: Morning, Mark.

Mark Douglas Hughes: Just following up on the prior question, when we look at adjusted ROA, the 80 bps in the quarter, obviously substantially impacted by the return on the alts. Was your suggestion there that the run-rate starting point on a go-forward basis ought to be the 80 bps and then, over time, perhaps the alt performance, as it matures, you would see improvement, but for the near term, kind of stick with the 80 basis points? Is that fair?

Conor Ernan Murphy: Yes. If I look at the yield in the quarter, and it ticked down about 16 basis points, we had about probably four of that roughly being market-related changes—SOFRs and floating assets, etc. A couple of it is because of assets that were tied to the Bermuda entity that we do not have anymore, so I would call that a permanent difference as well. But about 10 of it is largely timing-related. It was a combination of fewer preferred stock elements coming in the quarter—just fewer days, if you will, in the quarter. We had a little bit of investment expense clean-up in the quarter as well.

So maybe a third, roughly, of the decline we saw in the quarter will likely be permanent, and the other two-thirds likely one-time.

Mark Douglas Hughes: And there you are talking about sequentially, the 87 to 76?

Conor Ernan Murphy: Yes.

Mark Douglas Hughes: And then, when we think about the return on the alt portfolio that is dampening your adjusted ROE—kind of the 8% to 9% here lately—is that something that needs to be factored into the product pricing if the alt portfolio is uncertain? I know you are going to be shifting to more fee income in more of a capital-light model, and that will help returns. But is there anything in terms of the pricing that is relevant? And maybe I will ask in the context because I think investment in alts is a competitive dynamic. Do you think others are maybe too dependent on better alt performance? Just trying to think through how it interacts with ROE and ROA.

Christopher Owsley Blunt: I would say the pricing dynamic is a lot more complicated because it depends on duration of the liability. We are not repricing daily, but we are repricing frequently, and we are going through the calculations of exactly where we are on a real-time basis. In terms of the long-term assumption that we guided to, the purpose of it is literally to help you all think about how to forecast our earnings going forward, and the reason we give a range is we are in an environment where you could make a compelling argument for the lower end of the range and a compelling argument for the higher end of the range.

As Conor said, most importantly, from a capital perspective, we take a very pessimistic view because you do not want to get that one wrong. So there is probably more upside than downside from a capital perspective. And then on a pricing basis, we are modeling all real-time inputs, and it is done not just on a deterministic basis but on a stochastic basis—various environments, what is the range of returns, is the lower end of that band acceptable to us. In terms of us versus competition, I do not know that we are an outlier in either direction.

I think most of the folks in our space are in and around the 5% or 6% alts allocation within their portfolios. I think everybody tries to look at it long term. Now there could be big mix differences—if you are skewed towards credit; we tend to be skewed towards PE and real estate. And within real estate, you have the classic Blackstone themes of infrastructure and multifamily housing, as opposed to office.

Mark Douglas Hughes: You are going through a process to look at your alternatives. Was that for the owned distribution that you are talking about—the $80 million in EBITDA? Could you talk a little bit more about that, what you might be looking to do, how that would, to the extent that you have some alternatives, impact the go-forward business model?

Christopher Owsley Blunt: Absolutely. Thanks for bringing that up. I would say the good news is this is driven by realizing we are onto something really substantial here. What started as trying to help a handful of long-term distribution clients who were looking for growth capital and wanting an alternative to the PE model has become a real business, and a real business that is growing nicely. We really like the platforms that we own. We see opportunities to acquire more platforms.

The exercise we are going through now is where is the optimal place to hold this business—is it underneath the carrier, would it be beneficial to deconsolidate it from F&G Annuities & Life, Inc., what is the best way to fund it. So that is the exercise that we are going through. Everything is technically on the table. I would say it is pretty unlikely that we would sell the whole business at this juncture just given where we are on the inflection curve for the business, but it is something that we are super excited about.

Mark Douglas Hughes: And so, presumably, you would keep the same distribution relationships—your owned distribution, your own sales—on a go-forward basis and that would not be influenced by any type of transaction?

Conor Ernan Murphy: Correct. Because keep in mind, this was never about forcing market share because it is independent distribution. That label has meaning. You cannot force; you have to earn it, and they are separate teams. So we do not see that impacting the deep relationships that we have today.

Operator: Our next question comes from Alex Scott with Barclays. Please state your question.

Alex Scott: Hey, good morning. Follow-up on the conversation you were just having on the IMO and potential. Would you expect that would raise some amount of capital that the Holdco has available for deployment—whether it is putting it down into the operating companies or selling it to a third party or deconsolidating? Will that generate cash for the Holdco if you pursue one of those avenues? And if so, what would you look to do in terms of deployment?

Conor Ernan Murphy: Hey, Alex. The simple answer is yes. Obviously, it depends a little bit on how exactly we do it, but in the scenario where someone joins us in ownership of Peak and brings some capital in, one thing I would highlight is that right now all of our debt is at the Holdco, not at the Peak level. So I would expect some element of the proceeds we would likely use to pay down some debt. Right now, the dividends that we earn from the Peak entities obviously come up through the Holdco. So we would run a balance of that.

But outside of that, yes, we would have capital available for general business purposes or to continue to grow AUM, etc.

Alex Scott: Are you thinking of it from the standpoint of this would help you fund growth down in the OpCo, or is this—because you mentioned sum of the parts, and that sort of suggests that you are frustrated with the sum-of-the-parts discount, and that would cause me to believe maybe you would take proceeds and buy back stock. Which would you favor?

Christopher Owsley Blunt: Alex, I would say it is a little premature—not that we have not thought about this question—but I do not think it would be to convert that capital into additional spread earnings since our goal is to grow the fee portion of the earnings. Once it is there, it is like any other Holdco cash. All the various options are on the table—dividends, share buybacks, other things that we could do with that capital.

Alex Scott: That is helpful.

Christopher Owsley Blunt: The only other thing I would squeeze in is there is a very tangible benefit of deconsolidating. You would pick up some leverage capacity on the business itself that we cannot do today, so you would pick up a pretty attractive funding source to do more deals if in fact you deconsolidated from F&G Annuities & Life, Inc.

Conor Ernan Murphy: And I might add, our expectation would be having someone alongside us to continue. There is, as Chris is saying, great opportunity for continued momentum and growth in the entities as well. We would very much expect to continue to participate in that going forward, perhaps accelerating the growth of the Peak entities alongside a partner.

Alex Scott: Got it. Okay. Next one I had for you is on the investment portfolio. I appreciate the enhanced disclosure. One thing I realized, though, you shifted some AUM out of what we were calling alternative investments. The private origination fixed income that you disclosed more on in the presentation this quarter looked like it was still around the same level at $11 billion from the last time you talked about it. So where is this AUM that is no longer considered alternatives, more fixed income-like—does that have private credit-like features? I would have guessed that would have been considered private credit and did not see anything specifically on that.

Could you dimension that for us a bit so we could understand that alongside the private origination that you have in the deck here?

Christopher Owsley Blunt: Maybe do it in reverse order. If you say what is in what we actually consider alternatives—part of what we found is peers were defining it differently, and so we looked like an outlier when we knew that we were not in terms of the size of “alts.” Of the $4 billion sitting in alts, I think it is about $3 billion in traditional LPs. That is overwhelmingly private equity and private equity real estate with the themes—the classic Blackstone themes—that we have talked about. There is $1 billion that says other equity interests. It is not exclusively, but the bulk of that is what we would say credit residuals, so equity tranches on the credit side.

What people think of as the longer-term higher returning, but therefore more volatile, that is why that sits there. The reason we moved the credit over is those properties are going to look very, very similar to a high-quality CLO tranche or any other investment grade piece of paper. It was really a bucketing thing. We were defining it for a while based on where it sat on the schedule as opposed to what the underlying characteristics look like. On the disclosure side, we have been through all of our peers. We feel like we are giving as much, if not more, disclosure than anybody.

We feel good about the portfolio, and you can see that in the credit losses, upgrades versus downgrades, percentage of first lien, LTVs, just across the board. So I am not sure what more we can do at this point to allay some concerns.

Alex Scott: Just to be clear, so the CLO-like assets that you moved out of the definition of a non-fixed income alternative, that is or is not in the $11 billion that you gave more disclosure on? And if it is not, could you help us think through that piece a little more—what is the size of it even?

Christopher Owsley Blunt: Sure. Again, if you go back to what used to be $11 billion that we now define as four, the remaining seven is largely that. It is investment grade tranches of fixed income coupon-clipping securities. So it would look a lot like CLO or CMBS-type structure.

Alex Scott: And that is in the $11 billion that you have in your slides?

Conor Ernan Murphy: It is.

Alex Scott: Got it. That is clear now. Thank you. Sticking with this, of that $11 billion, can you talk about software? I know you mentioned 5% for the broad portfolio. Can you tell us about just the private origination because I think that is the area of software people are a little more concerned about. Do you know what that number is as a percentage of private origination?

Christopher Owsley Blunt: I have to confirm this, but I want to say it is about 20%. Within that, the reason we have given the piece that is at risk—you know software comes in so many different flavors. I would say the vast, vast majority of this we do not think is at high risk of AI disruption, particularly in the near term, because a lot of these loans are pretty short duration—two to three-year loans. These are not twenty-year loans to these companies. Based on what we have seen from some of our competitors, I do not know that we are necessarily an outlier in terms of software exposure.

Alex Scott: That is helpful. Maybe one last one. On investments others define in different ways—some peers include 144A private placements, and I am looking at it both ways. How much 144A private placement do you have?

Christopher Owsley Blunt: I do not have that number handy, but we can certainly dig that out and follow up for you.

Alex Scott: Alright. That is it for me. Thanks.

Conor Ernan Murphy: Great. Thank you.

Operator: This will conclude our question-and-answer session. I will now turn the conference back over to the CEO, Christopher Owsley Blunt, for closing remarks.

Christopher Owsley Blunt: Thanks again, everyone, for joining us this morning. We delivered a solid start to 2026 with record gross AUM, disciplined capital allocation with an increased capital return to shareholders, and a high-quality investment portfolio that continues to perform well. We continue to execute on our strategy toward a more fee-based, higher margin, and less capital intensive business model. Underpinned by our diversified new business engine and the structural tailwind of the peak '65 retirement wave, we remain confident in our ability to grow AUM and expand return on equity. We appreciate your continued interest in F&G Annuities & Life, Inc., as we remain focused on delivering long-term shareholder value.

We look forward to updating you on our second quarter earnings call.

Operator: Thank you for attending today's presentation. The conference call has concluded. You may now disconnect.