F&G Annuities & Life, Inc. (FG): what the price assumes

In the published model solve dated 2026-Q2, anchored at $25.04, F&G Annuities & Life, Inc. (FG) is priced for 8.9% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-26.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/FG

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 10.9% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026).

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and earnings-power and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.1%); the inversion above states its own rate.

Per-Model Detail (n=6)

Economic-Unit Decomposition (Sum Of The Parts)

The issuer is a funded financial business. Debt, interest, and cash flows are operating inputs, so industrial EV, net-debt, WACC, and free-cash-flow lenses do not apply; value the common-equity claim with book, earnings, capital, and payout economics.

No unit-level total common-equity value is stated. Each financial unit requires supported standalone common equity, normalized earnings, capital adequacy, and payout capacity. Consolidated debt, interest, and cash are operating balances, not an enterprise-to-equity bridge; company-level book, earnings, capital, and payout lenses remain the coherent cross-checks.

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• F&G writes far more business than it keeps, running assets under management of 74.5 billion dollars before reinsurance against 56.4 billion retained at the end of March, and the gap is deliberate: the ceded business comes back as fee income instead of balance sheet.
• Control sits outside the public float. The 10-K states plainly that "FNF controls a majority of the voting power of our outstanding common stock.", and that the company therefore "we qualify for, and rely on, exemptions from certain corporate governance requirements".
• The dated risk to watch is regulatory rather than operational: new NAIC capital charges on collateralised loan obligations take effect 31 December 2026 and the company estimates they could cut the insurance subsidiary's pro forma risk-based capital ratio by roughly ten percentage points.

Bull Case

Most life insurers grow the hard way. They put more of their own capital behind more policies, and the capital is the constraint. F&G has spent several years arranging its business so the constraint binds less. Gross sales were 3.2 billion dollars in the March quarter and net sales 2.2 billion, with the difference ceded to reinsurance partners; assets under management before reinsurance reached a record 74.5 billion dollars while the retained figure was 56.4 billion. The 10-K describes what the company gets in return: "flow reinsurance fee income from allocating capital to the highest returning retained business while enhancing cash flow and generating fee-based earnings". In plain terms, someone else's balance sheet takes the risk and F&G keeps a fee for having originated it.

That is a genuine change in the shape of the business, and it shows in what the company does with the money. In the first quarter it returned 67 million dollars to shareholders, 38 million of it in common and preferred dividends and 29 million buying back 1.2 million shares, and the board authorised a new three-year programme of up to 100 million dollars effective 13 March 2026. Buying stock while the shares trade below the stated book value of the company is the one capital allocation decision that is arithmetically defensible without any forecast at all.

The underwriting side is not where the trouble usually starts for this kind of insurer; the investment portfolio is. Here the record is good. Fixed maturities are 97% investment grade, and credit-related impairments have averaged six basis points over the past five years and ran three basis points in the March quarter. For a company whose product is a promise to pay a guaranteed rate for years, six basis points of annual credit loss across a five-year window is the number that matters most, and it is small.

The demand backdrop is the part that requires no argument. Indexed annuities sell because they solve a problem retirees genuinely have, and the 10-K describes the mechanism without exaggeration: "Negative performance of the market indices during a term can result in negative policyholder returns, with downside protection typically provided in the form of either a \"buffer\" or a \"floor\" to limit the policyholder's exposure to market loss." Core sales, meaning retail indexed annuities, indexed universal life and pension risk transfer, reached 2.0 billion dollars in the quarter against 1.8 billion a year earlier. Alongside them, institutional funding agreements and multiyear guaranteed annuities added 1.2 billion of opportunistic volume that the company writes only when the economics work.

Profitability on the growing asset base has been moving the right way. Adjusted return on assets was 76 basis points for the March quarter against 68 basis points a year earlier, and 87 basis points over the trailing twelve months. Book value per common share excluding the marks on the bond portfolio was 46.51 dollars at the end of March, up 2.08 dollars in three months. A business compounding book value per share at that pace while paying out roughly half its earnings is not being valued as though any of this is happening.

Bear Case

The question worth asking about this company is not whether the assets are cheap. Every family of valuation method lands above today's price, and the shares change hands below stated book. The question is who the capital belongs to, and the filing answers it: "FNF controls a majority of the voting power of our outstanding common stock." A controlled company sets its own governance terms within limits, and this one uses them: "we qualify for, and rely on, exemptions from certain corporate governance requirements". The 10-K goes further and names the specific overlap, noting that "A number of persons who currently are our directors are also officers, directors or employees of FNF". A minority holder buying a discount to book is also buying a seat with no leverage over how that book gets used.

The share count is the second half of the same point. Over the four years to March 2026 it has grown about 7.3% a year. A buyback of 29 million dollars in a quarter and a new authorisation of up to 100 million over three years are real, but they are small against that history, and the direction of travel for a minority holder has been dilution rather than concentration. Discounts to book have a way of persisting when the market suspects the equity will be issued rather than retired.

Then there is what the accounting can and cannot tell you. Reported net earnings were 244 million dollars in the March quarter against a 25 million dollar loss a year earlier, and the swing was almost entirely mark-to-market: 147 million dollars of favourable marks this year against 105 million of unfavourable marks last year, all of it excluded from the company's own adjusted figure. Underneath that sit assumptions the filing is candid about: policyholder behaviour is reviewed annually, and "The assumptions used require considerable judgment." When the difference between a good quarter and a bad one is a set of judgments about when customers will surrender contracts, the market applies a discount, and it is not obviously wrong to do so.

The alternative investment portfolio has been quietly failing to do its job for long enough that it should be treated as a pattern rather than a stumble. Investment income from alternatives came in 44 million dollars below the midpoint of management's long-term expectation in the March quarter, and 45 million below in the same quarter a year earlier. The preliminary read for the June quarter is worse: roughly 56 to 66 million dollars pre-tax, an annualised return near 6% against a long-term expectation around 12%, leaving the shortfall at about 65 million pre-tax. Three consecutive quarters below plan is not volatility around a mean. It is evidence the mean may be set too high, and the spread economics of the whole book are calibrated on it.

Finally, the regulator is about to move the goalposts. New NAIC risk-based capital factors for collateralised loan obligations take effect on 31 December 2026, and the company's own preliminary estimate is that applying them to the insurance subsidiary's portfolio could reduce its pro forma year-end risk-based capital ratio by approximately ten percentage points. Capital at an insurance subsidiary is what permits dividends up to the parent, and dividends up to the parent are what fund the buyback and the distribution the bull case rests on. A ten-point move is not a solvency event. It is a constraint arriving at the exact place the equity story needs room.

Valuation

Nothing here is priced as though the business works. The shares sit below stated book value of 32.75 dollars a share at the end of March, and far below the 46.51 dollars of book measured without the unrealized losses carried on the bond portfolio. That second figure matters because those losses reverse as bonds mature at par, provided the company is never forced to sell. An insurer funded by multiyear contracts with surrender charges is better placed than most to hold that line, though not immune to it.

What the price is actually assuming is modest. The market is paying under nine tenths of stated book for an insurer whose required return on its capital, read backwards out of that multiple, sits comfortably inside what this company has produced across its short public record. The base rate agrees: roughly three quarters of firms earning at that kind of level held it for about a decade. This is the unusual case where the embedded assumption is not the argument. The argument is why the market is unwilling to pay for it.

The methods make that plain by refusing to disagree. Asset-based approaches, earnings-power approaches, peer multiples and the dividend-discount frame all land above today's quote. There is no family reading this as expensive, which means the valuation debate cannot be about the numbers in the models. It has to be about what the models cannot see: the controlling shareholder, the judgment embedded in policyholder-behaviour assumptions, and an alternative investment sleeve that has run below its own long-term target for three quarters running.

Peer context supports the point rather than settling it. Across the annuity and life cohort the recent record is uneven: JXN, EQH and BHF each reported negative profit margins on their latest filings, while LNC came in at 9.2%, VOYA at 8.2% and CNO at 5.4%. F&G is in the profitable half of that group and is growing assets faster than most of it, with assets under management before reinsurance reaching 74.5 billion dollars against 67.4 billion a year earlier. Yet the read on what is priced in puts its multiple of book in the lower half of the same cohort. That gap is the whole investment question, and it will not be resolved by another quarter of good sales.

Capital and payout bound the rest. About 52.4% of the latest fiscal year's earnings went back to shareholders as dividends plus buybacks, leaving roughly half retained to support growth. The financing structure is visible in public markets too, with senior notes due 2053 carrying a 7.950% coupon and junior subordinated notes due 2065 at 7.300%, both listed. Those are not cheap coupons, and they set a floor under what any new capital costs. Against them sits an insurance subsidiary whose ability to pay dividends upward depends on a risk-based capital ratio the regulator is about to recalculate. The discount to book is the market's estimate of how much of the retained value actually reaches the minority holder, and nothing in the December rule change makes that estimate smaller.

Catalysts

The most recent disclosure came on 8 July 2026 and it was a warning shot on two fronts. F&G said preliminary investment income from alternative investments for the June quarter would be roughly 56 to 66 million dollars pre-tax, a midpoint representing an annualised return near 6% against management's long-term expectation of about 12%, leaving the quarter roughly 65 million dollars pre-tax and 51 million post-tax short of plan. Separately the company estimated that new NAIC risk-based capital factors for collateralised loan obligations, effective 31 December 2026, could reduce the insurance subsidiary's pro forma year-end risk-based capital ratio by approximately ten percentage points, with the final figure depending on ratings and tranches held at that date. Second quarter results are scheduled for 5 August 2026, with the call the following day.

The March quarter, reported on 6 May 2026, was the more encouraging half of the picture. Gross sales of 3.2 billion dollars beat the 2.9 billion of a year earlier, with core retail and pension risk transfer volume at 2.0 billion and opportunistic institutional business at 1.2 billion. Assets under management before reinsurance hit a record 74.5 billion dollars, up 11%, while retained assets of 56.4 billion grew 3% after a 1.8 billion inforce block left with the sale of F&G Life Re Ltd during the quarter. Adjusted net earnings were 110 million dollars, or 0.82 dollars per share, against 91 million and 0.72 dollars a year earlier. Reported net earnings of 244 million dollars, or 1.78 dollars per share, included 147 million of favourable mark-to-market movement that management excludes from its adjusted figure.

Capital actions and the calendar fill in the rest. The board authorised a new three-year repurchase programme of up to 100 million dollars effective 13 March 2026, and the company bought 1.2 million shares for 29 million dollars during the first quarter alongside 38 million of common and preferred dividends. Management has been explicit that the direction of travel is toward a more fee-based and less capital-intensive model, which makes the reinsurance and sidecar arrangements the thing to follow rather than headline sales. The August print will show whether the alternative investment shortfall stops at three quarters, and the December capital rule change will show up in the year-end statutory filings.

Peer Cohorts (Per Segment, With Filing Citations)

F&G Annuities & Life (consolidated insurance) (reported)

• JXN (Jackson Financial Inc.)
• FY2025 10-K: (continued) 202 Schedule III Jackson Financial Inc. Supplemental Insurance Information (In millions) Interest Credited Deferred on Other Acquisition and Operating Net Investment Contract Holder Sales Inducements Costs and Premium Income Funds Amortization Other Expenses December 31, 2025 Retail Annuities $ 67 $ 935 $…
• FY2025 10-K: …an update to mortality. An update to mortality and lapse was made for the additional liabilities - universal life-type insurance contracts. The discount rate assumption related to the single-A corporate instrument yield was updated based on current market data. Discount rates decreased in 2025 compared to 2024, based…
• CRBG (Corebridge Financial, Inc.)
• FY2025 10-K: …deposit asset of $ 2.5 billion, which includes a $ 2.1 billion deferred gain, reported in Other assets in the Consolidated Balance Sheets. The net deposit asset was $ 2.5 billion as of December 31, 2025. The deferred gain is amortized into income over the estimated remaining life of the reinsured contracts.…
• FY2025 10-K: (File No. 333-263898). 10.2 1 Amended and Restated Combination Coinsurance and Modified Coinsurance Agreement, dated as of June 2, 2020, between Fortitude Reinsurance Company, Ltd. and The Variable Annuity Life Insurance Company, incorporated by reference to Exhibit 10.14 to Corebridge Financial, Inc.'s Registration…
• EQH (Equitable Holdings, Inc.)
• FY2025 10-K: …enable plan participants to obtain education and guidance on their contributions and investment decisions and plan fiduciary services. Education and guidance are available online or in person from a team of plan relationship and enrollment specialists and/or the advisor that sold the product. Our clients' retirement…
• FY2025 10-K: …items, including policy charges and fee income, premiums, investment management and service fees, and other income. Gross Premiums FYP and Renewal premium and deposits. Invested assets Includes fixed maturity securities, equity securities, mortgage loans, policy loans, alternative investments and short-term…
• BHF (Brighthouse Financial, Inc.)
• FY2025 10-K: …& Other. In addition to the discussion that follows, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Segment Results for the Years Ended December 31, 2025 and 2024 - Adjusted Earnings (Loss)" and Note 2 of the Notes to the Consolidated…
• FY2025 10-K: …process discussed in Note 8. Annuities and Life For annuities, the Company reinsures portions of the living and death benefit guarantees issued in connection with certain variable annuities to unaffiliated reinsurers. Under these reinsurance agreements, the Company pays a reinsurance premium generally based on fees…
• LNC (LINCOLN NATIONAL CORPORATION)
• FY2025 10-K: …and contingent interest and standby real estate equity commitments. These items can vary significantly from period to period due to a number of factors and, therefore, can provide results that are not indicative of the underlying trends. Commercial Mortgage Loan Prepayment and Bond Make-Whole Premiums Prepayment and…
• FY2025 10-K: …the sale of our wealth management business, $( 22 ) million related to Life Insurance segment persistency optimization and $( 21 ) million primarily related to the Bain Capital transaction. (10) Includes deferred compensation mark-to-market adjustment of $( 32 ) million. (11) Includes gains on early extinguishment of…
• RGA (REINSURANCE GROUP OF AMERICA INC)
• FY2025 10-K: …whole life insurance contracts. Interest-sensitive contract liabilities are equal to (i) policy account values, which consist of an accumulation of gross premium payments; (ii) credited interest less expenses, mortality charges, and withdrawals; and (iii) fair value adjustments relating to business combinations.…
• FY2025 10-K: …annuities that the Company reinsures GMWB Guaranteed minimum withdrawal benefits; a feature of some variable annuities that the Company reinsures Group life insurance Insurance policy under which the lives of a group of people, most commonly employees of a single company, are insured in accordance with the terms of…
• CNO (CNO Financial Group, Inc.)
• FY2025 10-K: …related to predictive modeling, price algorithms, and insurers' use of AI. FEDERAL INCOME TAXATION Our annuity and life insurance products generally provide policyholders with an income tax advantage, as compared to other savings investments such as certificates of deposit and bonds, because taxes on the increase in…
• FY2025 10-K: 355.8 $ 255.3 * Eliminated in consolidation The accompanying notes are an integral part of the condensed financial statements. 195 CNO FINANCIAL GROUP, INC. AND SUBSIDIARIES SCHEDULE II Notes to Condensed Financial Information 1. Basis of Presentation The condensed financial information should be read in conjunction…
• VOYA (Voya Financial, Inc.)
• FY2025 10-K: …Assessments The Company accrues the cost of future guaranty fund assessments based on estimates of insurance company insolvencies provided by the National Organization of Life and Health Insurance Guaranty Associations and the amount of premiums written in each state. The Company has estimated this undiscounted…
• FY2025 10-K: Swiss Re Ltd 36 0% AA- Aa3 Swiss Re Life & Health America Inc AA- Aa3 Westport Insurance Corp AA- Aa3 Athene Holding Ltd 14 0% A- Baa1 Athene Life Re Ltd A+ A1 Benefits Re, LLC 12 100% Supplemental Re Cigna Corp 7 0% A- Baa1 Connecticut General Life Insurance Co A A2 (1) Collateral includes LOCs, assets held in trust…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.