F&G Explains Registered Index-Linked Annuity Launch Strategy
Chris Blunt says it's all about the distribution channels.
Interest rates are rising and banks are failing — and F&G Annuities & Life is preparing to launch a registered index-linked annuity.
Executives from the Des Moines, Iowa-based insurer talked about the RILA launch last week while going over its latest results in a conference call with securities analysts.
F&G performed well, with stable investment results and strong sales of non-variable indexed annuities and multi-year guaranteed annuities, F&G CEO Chris Blunt told the analysts.
Although broker-dealers distribute F&G’s non-variable products, the bulk of the company’s sales came through banks. “Banks are much more fixed-product-oriented,” Blunt said. “RILA tends to have a much bigger following in the broker-dealer community.”
More broker-dealers are agreeing to distribute F&G products because they know a RILA launch is coming, Blunt said.
What It Means
Distribution channel mechanics may affect the types of products your clients own.
The Company
F&G has ties to Blackstone. Fidelity National Financial, a title insurer, acquired F&G in 2020.
Fidelity National gave F&G a separate identity in December, distributing shares of F&G stock to its own shareholders.
The Earnings
F&G reported a $195 million net loss for the first quarter on $869 million in revenue, compared with $239 million in net income on $750 million in revenue for the first quarter of 2022.
Accounting rules now require F&G to put changes in the estimated value of investments and product benefits in its earnings.
Adjusted net earnings, which exclude the effects of the “mark to market” items, fell from $80 million to $49 million.
Non-variable indexed annuity sales increased from $962 million to $1.2 billion, and MYGA sales increased to $1.5 million, from $473 million.
F&G uses product design features and reinsurance to limit the amount of risk associated with the products sold, Blunt said.
The Market
Blunt said recent market volatility has helped F&G’s sales.
“Insurers and banks are the only folks that are legally allowed to use the G word, for guarantees,” Blunt said. “I think that’s a huge positive.”
Non-variable annuities are now paying higher rates than bank certificates of deposit, and that helps, too, Blunt said.
“I would suspect, given the capital pressures, that banks will likely be a little less competitive on CDs,” Blunt said.
Meanwhile, pressure on banks may help F&G’s investments by creating lending and investment opportunities for Blackstone and other non-bank capital providers, Blunt added.
Chris Blunt. (Photo: F&G)