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Section 1: 8-K (8-K)

Document




 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K

 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 9, 2018


FGL HOLDINGS
(Exact name of registrant as specified in its charter)


 
 
 
 
 
 
Cayman Islands
 
001-37779
 
98-1354810
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
 
Boundary Hall, Cricket Square
4th Floor
Grand Cayman, Cayman Islands
 
 
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code: (800) 445-6758
Former name or former address, if changed since last report.


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
     
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


 
Item 2.02.
Results of Operations and Financial Condition.
 
 The following information, including the Exhibits referenced in this Item 2.02, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
 
On May 9, 2018, FGL Holdings (the “Company”) issued a press release announcing its results of operations for the quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Report. In addition, the Company is including as Exhibit 99.2 to this report the related quarterly financial supplement.


Item 9.01
Financial Statements and Exhibits.
 
(d) Exhibits
 
 
 
 
 
Exhibit
No.
  
 
Description
 
 
99.1
 

99.2
 

 





 

 
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
FIDELITY & GUARANTY LIFE
 
 
 
 
 
 
/s/ Eric L. Marhoun
 
 
Eric L. Marhoun
 
 
General Counsel and Secretary
 
 
 
 
Dated: May 9, 2018


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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


FGL Holdings Reports First Quarter 2018 Results
GEORGE TOWN, Cayman Islands: May 9, 2018 - FGL Holdings (NYSE: FG), a leading provider of annuities and life insurance, today announced financial results for the first quarter of 2018.
Net income available to common shareholders was $45 million or $0.21 per diluted share
Adjusted operating income (AOI)1 available to common shareholders was $61 million or $0.28 per diluted share
Total annuity sales were $778 million in the quarter, up 6 percent over prior year
Average assets under management increased to $25.0 billion, up 24 percent over prior year
Net income available to common shareholders for the first quarter ended on March 31, 2018 was $45 million or $0.21 per diluted share. AOI available to common shareholders(1) was $61 million or $0.28 per diluted share.
"We delivered solid results in our first full reporting period following completion of the merger transaction," said Chris Littlefield, President and CEO of FGL Holdings. "We are building momentum as a transformed company with increases in assets under management, net investment income, sales and earnings during this quarter. We recently completed a successful $550 million debt offering that will be used to support our growth and capital position, and refinance our outstanding senior notes at a significantly lower rate.  Finally, we believe that the recent developments related to the 5th Circuit ruling that vacated the Department of Labor (DOL) rule and the Administration’s decision not to seek review of that ruling is positive for our business and the independent agents who sell our products."
As a result of acquisition accounting (purchase accounting or PGAAP), financial results for periods after the closing of the merger transaction on November 30, 2017 are generally not comparable to the results of prior periods. Certain metrics, such as sales and policyholder account values, are not affected by PGAAP and are comparable to prior period data. The company presents the tables and financial results herein as follows:
Fidelity & Guaranty Life (FGL) (the Predecessor Company)--January 1 through November 30, 2017
FG (the Successor Company)--December 1, 2017 and subsequent periods
The table below reconciles reported after-tax net income to adjusted operating income available to common shareholders.
(In millions)
 
Three Months Ended
 
 
March 31,
2018
 
 
March 31,
2017
 
 
FG (Successor)
 
 
FGL (Predecessor)
Reconciliation from Net Income to AOI(1):
 
(Unaudited)
 
 
(Unaudited)
Net income
 
$
52

 
 
$
22

Effect of investment losses (gains), net of offsets (2)
 
39

 
 
15

Effect of change in FIA embedded derivative discount rate, net of offsets (2)
 

 
 
(2
)
Effect of changes in fair values of FIA related derivatives, embedded derivatives and hedging costs (3) (5)
 
(46
)
 
 

Effect of change in fair value of reinsurance related embedded derivative, net of offsets (4)
 

 
 
8

Effect of integration, merger related & other non-operating items
 
8

 
 
2

Tax effect of affiliated reinsurance embedded derivative (5)
 
15

 
 

Tax impact of adjusting items
 

 
 
(7
)
    AOI (1)
 
$
68

 
 
$
38

Dividends on preferred stock (5)
 
(7
)
 
 

    AOI available to common shareholders (1)
 
$
61

 
 
$
38


The current quarter included net favorable items of $8 million, or $0.04 per diluted share available to common shareholders. The prior year quarter included net unfavorable items of ($1) million, or ($0.02) per diluted share. All periods reflect the weighted average diluted shares then outstanding. The table below details notable items in each period.





 
 
 
 
 
 
 
Current Year Quarter (FG)
 
 
 
 
 
• Favorable actual to expected mortality within the single premium immediate annuity (SPIA) product line and other annuity reserve movements
 
$8 million
 
 
Prior Year Quarter (FGL)
 
 
 
 
 
  Net unfavorable adjustments related to higher deferred acquisition cost (DAC) amortization, primarily due to equity market fluctuations
 
($3) million
 
 
 
  Higher expense related to legacy compensation plans
 
($1) million
 
 
 
• Favorable actual to expected mortality within the SPIA product line and other annuity reserve movements
 
$3 million
 
 
 
 
 
 
 

Summary Financial Results (Unaudited)
 
 
Three Months Ended
 
 
March 31, 2018
 
March 31, 2017
(In millions, except per share data)
 
FG (Successor)
 
FGL (Predecessor)
Fixed indexed annuity (FIA) sales (1)
 
$
436

 
$
438

Total annuity sales (1)
 
$
778

 
$
732

Average assets under management (1)
 
$
24,967

 
$
20,162

Net investment spread - FIA (1)
 
2.34
%
 
3.05
%
Net investment spread - All products (1)
 
1.88
%
 
2.41
%
Net income available to common shareholders
 
$
45

 
$
22

Net income available to common shareholders per diluted share
 
$
0.21

 
$
0.38

AOI available to common shareholders (1)
 
$
61

 
$
38

AOI available to common shareholders per diluted share (1)
 
$
0.28

 
$
0.65

Weighted average common basic shares (6)
 
214.4

 
58.3

Weighted average common diluted shares (6)
 
214.4

 
58.4

Total common shares outstanding (6)
 
214.4

 
59.0

Book value per common share
 
$
5.87

 
$
32.34

Book value per common share excluding AOCI (1)
 
$
7.17

 
$
27.41


See footnotes below.

Sales Results
Total annuity sales were $778 million for the first quarter, an increase of 6 percent compared to the first quarter of 2017. Sales of the company's core fixed indexed annuity (FIA) product in the current quarter of $436 million were on par with the prior year quarter. FIA sales decreased 6 percent compared to the fourth quarter of 2017. We continued to see a robust competitive environment during the first quarter and reduced consumer appetite for safe money products given strong equity market performance.
Sales of multi-year guarantee annuities (MYGA) were $142 million in the current quarter, as compared to $158 million in the same period last year. During the quarter, we completed a $200 million funding agreement with the Federal Home Loan Bank, under an investment spread strategy, compared to $136 million in the same period last year. The funding agreements are reflected as institutional spread based products and we view this volume as subject to fluctuation period to period.
Indexed universal life (IUL) sales in the quarter were $6 million compared to $14 million last year. The decline in IUL sales reflects the company's focus on quality of new business and pricing discipline to achieve profitability and capital targets.
Investment Portfolio Performance





The investment portfolio is performing well and in line with operating objectives. Asset purchases during the first quarter were $3.7 billion at an average yield(7) of 4.99 percent. A large portion of asset purchases came from a $2.7 billion block trade completed in February 2018 as part of a planned portfolio repositioning. The block trade resulted in $40 million higher annualized net investment income and a yield improvement on those assets from 3.50 percent to 5.00 percent, or 150 basis points. Asset purchases and sales from the block trade were in corporate securities and the remaining $1.0 billion of asset purchases were investment grade corporate bonds and structured securities. Overall, the average NAIC rating for the portfolio is a stable at 1.6.
Average assets under management (AAUM) were $25.0 billion at March 31, 2018, reflecting an increase of $0.2 billion over the sequential quarter. AAUM increased $4.8 billion compared to the prior year period due to net sales, as well as the mark-to-market valuation of the investment portfolio as of the date of the merger of approximately $1.2 billion, and the inclusion of acquired $1.9 billion Front Street Re and FGL Holdings. A roll forward of AAUM can be found in the non-GAAP measurements section of this release.
Net investment income was $263 million in the first quarter of 2018, up $16 million or 6 percent from the prior year quarter. Net investment income grew from higher AAUM, partially offset by premium amortization related to the fair value mark on the investment portfolio resulting from the merger transaction. Net investment income was down $3 million or 1 percent from the sequential quarter, due to the full quarterly impact of noncash premium amortization and investment management agreement (IMA) fees, partially offset by net asset growth. The average earned yield on the total portfolio in the quarter was 4.21 percent, down approximately 70 basis points from the prior year quarter primarily due to the significant increase in AAUM and the impact of premium amortization noted above.
Net investment spread across all product lines was 188 basis points in the first quarter of 2018 compared to an historical sequential quarter spread of 201 basis points. Spread trends primarily reflect the decline in portfolio yield due to purchase accounting effects and are otherwise stable. Net investment spread for fixed indexed annuities declined from approximately 267 basis points in the fourth quarter 2017 to 234 basis points in the first quarter of 2018 primarily due to lower yield from purchase accounting. On a Statutory basis, the yield on the investment portfolio on an economic basis was approximately 5.0 percent in the first quarter of 2018 compared to 5.1 percent in the prior period.
Capital Management & Rating Trends
GAAP book value per common share at March 31, 2018 was $5.87 on a reported basis; book value per common share excluding accumulated other comprehensive income (AOCI) was $7.17, with 214.4 million common shares outstanding as of March 31, 2018.
The Company continues to have a strong and stable capital position, with estimated statutory company action level risk-based capital (RBC) on an aggregate, combined basis for Fidelity & Guaranty Life Insurance Company and F&G Re Ltd of 480 percent as of March 31, 2018, including impacts of Tax Reform.
On April 20, 2018, the Company closed on $550 million aggregate principal amount of 5.50% senior notes due 2025. The Company used the net proceeds to repay $135 million borrowings under its revolving credit facility and related expenses. The Company expects to use the remaining net proceeds to redeem and discharge all of the outstanding $300 million aggregate principal amount of its outstanding 6.375% Senior Notes due 2021 on May 16, 2018, and for general corporate purposes, which may include additional capital contributions to the Company's insurance subsidiaries.





FGL HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 
March 31,
2018
 
December 31,
2017
 
(Unaudited)
 
(Audited)
ASSETS
 
 
 
Investments:
 
 
 
Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2018 - $21,738; December 31, 2017 - $21,475)
$
21,366

 
$
21,590

Equity securities, at fair value (amortized cost: March 31, 2018 - $780; December 31, 2017 - $764)
769

 
761

Derivative investments
293

 
492

Short term investments

 
25

Commercial mortgage loans
528

 
548

Other invested assets
276

 
188

Total investments
23,232

 
23,604

Cash and cash equivalents
1,157

 
1,215

Accrued investment income
240

 
211

Funds withheld for reinsurance receivables, at fair value
748

 
756

Reinsurance recoverable
2,495

 
2,494

Intangibles, net
954

 
856

Deferred tax assets, net
258

 
176

Goodwill
476

 
476

Other assets
105

 
141

Total assets
$
29,665

 
$
29,929

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Contractholder funds
$
22,083

 
$
21,844

Future policy benefits, including $712 and $728 at fair value at March 31, 2018 and December 31, 2017, respectively
4,711

 
4,751

Liability for policy and contract claims
70

 
78

Debt
307

 
307

Revolving credit facility
135

 
105

Other liabilities
717

 
892

Total liabilities
28,023

 
27,977

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 Shareholders' equity:
 
 
 
Preferred stock ($.0001 par value, 100,000,000 shares authorized, 377,417 and 375,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively)

 

Common stock ($.0001 par value, 800,000,000 shares authorized, 214,370,000 issued and outstanding at March 31, 2018 and December 31, 2017, respectively)

 

Additional paid-in capital
2,039

 
2,037

(Accumulated deficit) Retained earnings
(119
)
 
(160
)
Accumulated other comprehensive (loss) income
(278
)
 
75

Total shareholders' equity
1,642

 
1,952

Total liabilities and shareholders' equity
$
29,665

 
$
29,929






FGL HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)

 
Three Months Ended
 
March 31,
2018
 
 
March 31,
2017
 
Successor
 
 
Predecessor
 
(Unaudited)
 
 
(Unaudited)
Revenues:
 
 
 
 
Premiums
$
18

 
 
$
3

Net investment income
263

 
 
247

Net investment (losses) gains
(191
)
 
 
81

Insurance and investment product fees and other
41

 
 
44

Total revenues
131

 
 
375

Benefits and expenses:
 
 
 
 
Benefits and other changes in policy reserves
(18
)
 
 
268

Acquisition and operating expenses, net of deferrals
40

 
 
33

Amortization of intangibles
16

 
 
33

        Total benefits and expenses
38

 
 
334

Operating income
93

 
 
41

Interest expense
(6
)
 
 
(6
)
Income before income taxes
87

 
 
35

Income tax expense
(35
)
 
 
(13
)
        Net income
$
52

 
 
$
22

Less preferred stock dividend
7

 
 

Net income available to common shareholders
$
45

 
 
$
22

 
 
 
 
 
Net income per common share
 
 
 
 
 
 
 
 
 
Basic
$
0.21

 
 
$
0.38

Diluted
$
0.21

 
 
$
0.38

Weighted average common shares used in computing net income per common share:
 
 
 
 
Basic
214.4

 
 
58.3

Diluted
214.4

 
 
58.4

 
 
 
 
 
Cash dividend per common share
$

 
 
$
0.065







RECONCILIATION OF BOOK VALUE PER COMMON SHARE EXCLUDING AOCI

(In millions, except per share data)
March 31, 2018
 
 
 
December 31, 2017
 
(Unaudited)
 
 
 
(Unaudited)
Reconciliation to total shareholders' equity:
 
 
 
 
 
Total shareholders' equity
$
1,642

 
 
 
$
1,952

     Less: AOCI
(278
)
 
 
 
75

     Less: Preferred equity
384

 
 
 
377

Total common shareholders' equity excluding AOCI (1)
$
1,536

 
 
 
$
1,500

 
 
 
 
 
 
Total common shares outstanding
214.4

 
 
 
214.4

Weighted average common shares outstanding - basic
214.4

 
 
 
214.4

Weighted average common shares outstanding - diluted
214.4

 
 
 
214.4

 
 
 
 
 
 
Book value per common share including AOCI (1)
$
5.87

 
 
 
$
7.35

Book value per common share excluding AOCI(1)
$
7.17

 
 
 
$
7.00



ROLLFORWARD OF AVERAGE ASSETS UNDER MANAGEMENT(1) (AAUM) (Unaudited)

 
 
 
 
(In billions)
 
 
AAUM
AAUM as of March 31, 2017
 
 
$
20.2

Purchase accounting mark-to-market valuation of investment portfolio
 
 
1.2

Inclusion of acquired Front Street Re and FGL Holdings
 
 
1.9

Sales volumes
 
 
1.4

Other items
 
 
0.3

AAUM as of March 31, 2018
 
 
$
25.0


Footnotes:
(1)
Non-GAAP financial measure. See the Non-GAAP Measures section below for additional information.
(2)
Amounts are net of offsets related to value of business acquired (VOBA), deferred acquisition cost (DAC) and deferred sale inducement (DSI) amortization.
(3)
The Company adjusted its non-GAAP measure to remove the residual impacts of fair value accounting on its FIA products, including gains and losses on derivatives hedging those policies, post-merger.
(4)
Applicable to the Predecessor only due to the merger.
(5)
Applicable to the Successor only.
(6)
Predecessor share counts reflect those of the Predecessor entity prior to the merger.
(7)
Average yield reflects investment book yield on bonds purchased during the quarter. See the Non-GAAP Measures section below for additional information.


Purchase Accounting
On November 30, 2017, Fidelity & Guaranty Life completed its merger transaction with CF Corp, emerging as FGL Holdings. As of the merger date, the company applied the acquisition method of accounting (purchase accounting or PGAAP), including the initial recognition of most of FGL's and Front Street Re assets and liabilities at fair value, and the recognition of goodwill and other merger-related intangible assets. Prior period results are not restated for the new basis of accounting, which is used in the preparation of future financial statements and related disclosures.

Non-GAAP Measures





Management believes that certain non-GAAP financial measures may be useful in certain instances to provide additional meaningful comparisons between current results and results in prior operating periods. Reconciliations of such measures to the most comparable GAAP measures are included herein.
The Company updated its AOI definition as to remove the residual impacts of fair value accounting on its FIA products, including gains and losses on derivatives hedging those policies. Management believes the revised measure enhances the understanding of the business post-merger and is more useful and relevant to investors as compared to the previous definition which eliminated only the effects of changes in the interest rates used to discount the FIA embedded derivative.
AOI is a non-GAAP economic measure we use to evaluate financial performance each period. AOI is calculated by adjusting net income (loss) to eliminate (i) the impact of net investment gains/losses including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging our indexed annuity policies, (ii) the effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging cost, (iii) the tax effect of affiliated reinsurance embedded derivative, (iv) the effect of integration, merger related & other non-operating items, (v) impact of extinguishment of debt, and (vi) net impact from Tax Cuts and Jobs Act. Adjustments to AOI are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate of 21%, as appropriate. While these adjustments are an integral part of the overall performance of the Company, market conditions and/or the non-recurring or non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. 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.

AOI available to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. AOI available to common shareholders is calculated by adjusting net income (loss) available to common shareholders to eliminate (i) the impact of net investment gains including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging our indexed annuity policies, (ii) the effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging cost, (iii) the tax effect of affiliated reinsurance embedded derivative, (iv) the effect of integration, merger related & other non-operating items, (v) impact of extinguishment of debt, and (vi) net impact from Tax Cuts and Jobs act. All adjustments to AOI available to common shareholders are net of the corresponding impact on amortization of intangibles. The income tax impact related to these adjustments is measured using an effective tax rate of 21%, as appropriate. While these adjustments are an integral part of the overall performance of FG, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. 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.

Net investment spread is the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA policies. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return, inclusive of hedging costs, provided to policyholders.
AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; (ii) related party loans and investments; (iii) accrued investment income; (iv) funds withheld at fair value; (v) the net payable/receivable for the purchase/sale of investments and (iv) cash and cash equivalents, excluding derivative collateral, at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of returned on their income generating invested assets.

Common Shareholders’ Equity is based on Total Shareholders’ Equity excluding Equity Available to Preferred Shareholders. Management considers this to be a useful measure internally and to investors to assess the level of equity that is attributable common stock holders.

Common Shareholders’ Equity Excluding AOCI is based on Common Shareholders Equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on common equity.






Book Value per Common Share including and excluding AOCI is calculated as Common Shareholders’ Equity and Common Shareholders Equity Excluding AOCI divided by the total number of shares of common stock outstanding. Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of the Company.
Sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. For GAAP purposes annuity and IUL sales are recorded as deposit liabilities (i.e. contract holder funds). 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.
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace GAAP financial results and should be read in conjunction with those GAAP results.
Conference Call and Earnings Release
This press release and the financial supplement will be posted to the Company’s website at investors.fglife.bm.

FGL Holdings will conduct a conference call on Thursday, May 10, 2018 at 10:00 a.m. ET to discuss first quarter 2018 results.
The event can be accessed the following ways:
For internet webcast, visit investors.fglife.bm/investors at least 15 minutes prior to the start of the call to register.
For conference call, dial 877-883-0383 (U.S. callers) or 412-902-6506 (International callers) approximately 10 minutes prior to the start of the call. The access code is 8069575.
A replay of the event via webcast will be available after the call at investors.fglife.bm/investors.
A replay of the event via telephone will be available by dialing 877-344-7529 (U.S. callers) or 412-317-0088 (International callers). The access code is 10119111.
The replay information will be available through May 31, 2018.

About FGL Holdings
FGL Holdings, an insurance holding company, helps middle-income Americans prepare for retirement. Through its subsidiaries, the company is a leading provider of annuity and life insurance products. FGL Holdings, domiciled in the Cayman Islands, trades on the New York Stock Exchange under the ticker symbol FG. For more information, please visit www.fglife.bm.
Forward Looking Statements
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995: This document contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results, events and developments to differ materially from those set forth in, or implied by, such statements. These statements are based on the beliefs and assumptions of FG's management and the management of FG's subsidiaries (including target businesses). Forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans," "seeks," "estimates," "projects," "may," "will," "could," "might," or "continues" or similar expressions. Factors that could cause actual results, events and developments to differ include, without limitation:  the accuracy of FG's assumptions and estimates; FG's and its insurance subsidiaries' ability to maintain or improve financial strength ratings; FG's ability to manage its business in a highly regulated industry; regulatory changes or actions; the impact of FG's reinsurers failing to meet their assumed obligations; restrictions on FG's ability to use captive reinsurers; the impact of interest rate fluctuations; changes in the federal income tax laws and regulations; litigation (including class action litigation), enforcement investigations or regulatory scrutiny; the performance of third parties; the loss of key personnel; telecommunication, information technology and other operational systems failures; the continued availability of capital; new accounting rules or changes to existing accounting rules; general economic conditions; FG's ability to protect its intellectual property; the ability to maintain or obtain approval of the Iowa Insurance Department and other regulatory authorities as required for FG's operations; FG's ability to successfully acquire new companies and integrate such acquisitions; and other factors discussed in FG’s most recent Annual Report on Form 10-K for the year ended December 31, 2017, and its Quarterly Reports on Form 10-Q, which can be found at the SEC's website www.sec.gov.
All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. FG does not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results, except as required by law.







Investor Contact:
Diana Hickert-Hill
FGL Holdings
Investors@fglife.bm
410-487-8898


Source: FGL Holdings


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Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2

393420958_fglletterheada02.jpg



Investor Supplement
March 31, 2018
(Year Ended December 31)

The financial statements and financial exhibits included herein are unaudited. These financial statements and exhibits should be read in conjunction with the Company's periodic reports on Form 10-K, Form 10-Q and Form 8-K.

Fidelity & Guaranty Life (“FGL”; NYSE: FGL), a former majority owned subsidiary of HRG Group, Inc. (“HRG”; NYSE: HRG), completed the merger with CF Corporation (NASDAQ: CFCO) (“CF Corp”) and its related entities (“CF Entities”), on November 30, 2017. As a result of the Business Combination completed November 30, 2017, CF Corp changed their name to FGL Holdings (NYSE: FG). For accounting purposes, FGL Holdings was determined to be the acquirer and FGL was deemed the acquired party and accounting predecessor. In addition, on November 30, 2017 CF Corp acquired all of the issued and outstanding shares of Front Street Re (Cayman) Ltd. and Front Street Re. Ltd (collectively "FSR Companies"). Our financial statement presentation includes the financial statements of FGL and its subsidiaries as “Predecessor” for the periods prior to the completion of the Business Combination and FGL Holdings, including the consolidation of FGL and its subsidiaries and FSR Companies, as "Successor" for periods from and after the Closing Date.

Non-GAAP Financial Measures

This document contains certain non-GAAP financial measures commonly used in our industry that, together with the relevant GAAP measures, may enhance a user’s ability to analyze the Company's operating performance and capital position for the periods presented. These measures should be considered supplementary to our results in accordance with GAAP and should not be viewed as a substitute for the GAAP measures. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP financial measures to those of other companies.





FGL HOLDINGS
Financial Supplement
March 31, 2018
(All periods are unaudited)
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 


FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


NON-GAAP FINANCIAL MEASURES : Successor
While management believes that non-GAAP measurements are useful supplemental information, such adjusted results are not intended to replace GAAP financial results and should be read in conjunction with those GAAP results.
AOI
AOI is a non-GAAP economic measure we use to evaluate financial performance each period. AOI is calculated by adjusting net income (loss) to eliminate (i) the impact of net investment gains/losses including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging our indexed annuity policies, (ii) the effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging cost, (iii) the tax effect of affiliated reinsurance embedded derivative, (iv) the effect of integration, merger related & other non-operating items, (v) impact of extinguishment of debt, and (vi) net impact from Tax Cuts and Jobs Act. Adjustments to AOI are net of the corresponding impact on amortization of intangibles, as appropriate. The income tax impact related to these adjustments is measured using an effective tax rate of 21%, as appropriate. While these adjustments are an integral part of the overall performance of the Company, market conditions and/or the non-recurring or non-operating nature of these items can overshadow the underlying performance of the core business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. 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. Beginning with the quarter ended March 31, 2018, the Company updated its AOI definition to remove the residual impacts of fair value accounting on its FIA products, including gains and losses on derivatives hedging those policies. Management believes the revised measure enhances the understanding of the business post-merger and is more useful and relevant to investors as compared to the previous definition which eliminated only the effects of changes in the interest rates used to discount the FIA embedded derivative. Periods shown prior to March 31, 2018 have not been adjusted to reflect the new definition.
AOI Available to Common Shareholders
AOI available to common shareholders is a non-GAAP economic measure we use to evaluate financial performance attributable to our common shareholders each period. AOI available to common shareholders is calculated by adjusting net income (loss) available to common shareholders to eliminate (i) the impact of net investment gains including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging our indexed annuity policies, (ii) the effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging cost, (iii) the tax effect of affiliated reinsurance embedded derivative, (iv) the effect of integration, merger related & other non-operating items, (v) impact of extinguishment of debt, and (vi) net impact from Tax Cuts and Jobs act. All adjustments to AOI available to common shareholders are net of the corresponding impact on amortization of intangibles. The income tax impact related to these adjustments is measured using an effective tax rate of 21%, as appropriate. While these adjustments are an integral part of the overall performance of FG, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, Management considers this to be a useful measure internally and to investors and analysts in analyzing the trends of our operations. 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.
Sales
Sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. For GAAP purposes annuity and IUL sales are recorded as deposit liabilities (i.e. contract holder funds). 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.

3

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Common Shareholders’ Equity
Common Shareholders’ Equity is based on Total Shareholders’ Equity excluding Equity Available to Preferred Shareholders. Management considers this to be a useful measure internally and to investors to assess the level of equity that is attributable common stock holders.
Common Shareholders’ Equity Excluding AOCI
Common Shareholders’ Equity Excluding AOCI is based on Common Shareholders Equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned equity on common equity.
Equity Available to Preferred Shareholders
Equity available to preferred shareholders is equal to the product of (a) the number of preferred shares outstanding plus share dividends declared but not yet issued and (b) the original liquidation preference amount per share. Management considers this non-GAAP measure to provide useful information internally and to investors and analysts to assess the level of equity that is attributable to preferred stock holders.
Total Capitalization Excluding AOCI
Total Capitalization Excluding AOCI is based on shareholders’ equity excluding the effect of AOCI. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess the capital position of the Company.
Book Value per Common Share (including and excluding AOCI)
Book Value per Common Share including and excluding AOCI is calculated as Common Shareholders’ Equity and Common Shareholders Equity Excluding AOCI divided by the total number of shares of common stock outstanding. Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of the Company.
Statutory Book Value per Common Share (including and excluding Interest maintenance reserve ("IMR") and asset valuation reserve ("AVR"))
Statutory Book Value per Common Share including IMR and AVR is calculated as Fidelity & Guaranty Life Insurance Company ("FGLIC")’s statutory basis capital and surplus plus F&G Re's U.S. GAAP Common Shareholders' Equity excluding the impact of reinsurance embedded derivatives and AOCI, plus FSRC’s U.S. GAAP Common Shareholders’ Equity excluding AOCI divided by the total number of shares of common stock outstanding at FGL Holdings. Statutory Book Value per Common Share excluding IMR and AVR is calculated as FGLIC’s statutory basis capital and surplus excluding IMR and AVR plus F&G Re's U.S. GAAP Common Shareholders' Equity excluding the impact of reinsurance embedded derivatives and AOCI, plus FSRC’s U.S. GAAP Common Shareholders’ Equity excluding AOCI divided by the total number of shares of common stock outstanding at FGL Holdings.  Management considers this to be a useful measure internally and for investors and analysts to assess the capital position of our primary insurance entities.
Return on Common Shareholders’ Equity
Return on Common Shareholders' Equity is a non-GAAP financial measure. It is calculated by dividing net income (loss) available to common shareholders by total average Common Shareholders’ Equity. Average Common Shareholders Equity for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity is calculated using the beginning and ending Common Shareholders’ Equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Management considers this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.


4

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Return on Common Shareholders Equity Excluding AOCI
Return on Common Shareholders' Equity Excluding AOCI is a non-GAAP financial measure. It is calculated by dividing net income (loss) available to common shareholders by total average Common Shareholders’ Equity Excluding AOCI. Average Common Shareholders Equity Excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity Excluding AOCI is calculated using the beginning and ending Common Shareholders’ Equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Management considers this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.
Adjusted Operating Return on Common Shareholders’ Equity Excluding AOCI
Adjusted Operating Return on Common Shareholders’ Equity Excluding AOCI is a non-GAAP financial measure. It is calculated by dividing AOI Available to Common Shareholders’ by total average Common Shareholders’ Equity Excluding AOCI. Average Common Shareholders’ Equity Excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average Common Shareholders Equity is calculated using the beginning and ending Common Shareholders Equity, Excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. As a result of the merger, the starting point for calculation of average Common Shareholders’ Equity was reset to December 1, 2017. The rolling average will be updated from the merger date forward to use available historical data points for the successor until 5 historical data points are available. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, Management considers this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of adjusted earned return on common equity.
Debt-to-Capital
Debt-to-capital ratio is computed by dividing total debt by total capitalization excluding AOCI. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.

Rating Agency Adjusted Debt to Capitalization, excluding AOCI
Rating Agency Adjusted Debt to Capitalization, excluding AOCI is computed by dividing the sum of total debt and 50% Equity Available to Preferred Shareholders by total capitalization excluding AOCI less a 50% credit for Equity Available to Preferred Shareholders. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.

Average Assets Under Management (AAUM)
AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; (ii) related party loans and investments; (iii) accrued investment income; (iv) funds withheld at fair value; (v) the net payable/receivable for the purchase/sale of investments and (iv) cash and cash equivalents, excluding derivative collateral, at the beginning of the period and the end of each month in the period, divided by the total number of months in the period plus one. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.
Yield on 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.

Net Investment Spread
Net investment spread is the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging our risk on FIA policies. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Company’s invested assets against the level of investment return, inclusive of hedging costs, provided to policyholders.
   

5

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Investment Book Yield
Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of returned on the Company’s income generating invested assets

NON-GAAP FINANCIAL MEASURES : Predecessor
The following represents the definitions of non-GAAP measures used by the Predecessor entity.
For the period ended November 30, 2017, the Predecessor changed their definition of AOI to exclude the effects of integration and merger related expenses due to the volume of integration and merger expenses incurred during the two months ended November 30, 2017. Predecessor management believed the exclusion of these charges provided users of the financial statements a more representative view of the results of the core business of the Predecessor for that period. Predecessor periods shown prior to November 30, 2017 have been adjusted to reflect the new definition.
AOI
AOI is a non-GAAP economic measure the Predecessor used to evaluate financial performance each period. AOI is calculated by adjusting net income to eliminate (i) the impact of net investment gains including other than temporary impairment ("OTTI") losses recognized in operations, but excluding gains and losses on derivatives hedging indexed annuity policies, (ii) the effect of changes in the interest rates used to discount the FIA embedded derivative liability, (iii) the effect of change in fair value of the reinsurance related embedded derivative and (iv) the effect of integration and merger related expenses. All adjustments to AOI are net of the corresponding VOBA and DAC impact. The income tax impact related to these adjustments is measured using an effective tax rate of 35%, as appropriate. While these adjustments were an integral part of the overall performance of the Predecessor, market conditions impacting these items could overshadow the underlying performance of the Predecessor's business. Accordingly, the Predecessor believed using a measure which excluded their impact was effective in analyzing the trends of their operations. The Predecessor's 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.
Sales
Sales are not derived from any specific GAAP income statement accounts or line items and should not be viewed as a substitute for any financial measure determined in accordance with GAAP. For GAAP purposes annuity sales are recorded as deposit liabilities (i.e. contract holder funds). The Predecessor believed that presentation of sales as measured for management purposes enhances the understanding of the 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 Capitalization Excluding AOCI
Total Capitalization Excluding AOCI is based on shareholders’ 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, the Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess capital position of the Predecessor.
Book Value per share (including and excluding AOCI) (presented herein as Book Value per common share including and excluding AOCI)
Book Value per share including and excluding AOCI is calculated as shareholders’ equity and shareholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding. The Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts to help assess capital position of the Predecessor.
Return on Average Shareholders’ Equity (presented herein as Return on Average Common Shareholders’ Equity)
Return on Average Shareholders’ Equity is a non-GAAP financial measure. It is calculated by dividing net income (loss) available to shareholders by total average shareholders’ equity. Average shareholders’ equity for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity is calculated using the beginning and ending shareholders’ equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. The Predecessor considered this to be a useful measure internally and for investors and analysts to assess the level of return driven by the Company that is attributable to common shareholders.

6

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Return on Average Shareholders’ Excluding AOCI (presented herein as Return on Average Common Shareholders’ Equity Excluding AOCI)
Return on Average Shareholders’ Equity Excluding AOCI is a non-GAAP financial measure. It is calculated by dividing net income (loss) available to common shareholders by total average shareholders’ equity excluding AOCI. Average shareholders’ equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity excluding AOCI is calculated using the beginning and ending shareholders’ equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. Since AOCI fluctuates from quarter to quarter due to unrealized changes in the fair value of available for sale investments, the Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of earned return on shareholders’ equity.
Adjusted Operating Return Equity Excluding AOCI (presented herein as Adjusting Operating return on common shareholders’ equity, excluding AOCI)
Adjusted Operating Return on Equity Excluding AOCI is a non-GAAP financial measure. It is calculated by dividing AOI by total average shareholders’ equity excluding AOCI. Average shareholders’ equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average shareholders’ equity is calculated using the beginning and ending shareholders’ equity, excluding AOCI, for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. The Predecessor considered this non-GAAP financial measure to provide useful supplemental information internally and to investors and analysts assessing the level of adjusted earned return on equity.
Total Debt to Capitalization, excluding AOCI
Total Debt to Capitalization, excluding AOCI is computed by dividing total debt by total capitalization excluding AOCI. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.
Rating Agency Adjusted Debt to Capitalization, excluding AOCI
Rating Agency Adjusted Debt to Capitalization, excluding AOCI is computed by dividing the sum of total debt and 50% preferred equity by total capitalization excluding AOCI less a 50% preferred equity credit. Management considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing its capital position.

Average Assets Under Management (AAUM)
AAUM is the sum of (i) total invested assets at amortized cost, excluding derivatives; (ii) related party loans and investments; and (iii) cash and cash equivalents, excluding derivative collateral, 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. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the rate of return on assets available for reinvestment.

Yield on AAUM
Yield on AAUM is calculated by dividing annualized net investment income by AAUM. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of return earned on AAUM.

Net Investment Spread
Net investment spread is the excess of net investment income earned over the sum of interest credited to policyholders and the cost of hedging the Predecessor’s risk on FIA policies. The Predecessor considers this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the performance of the Predecessor’s invested assets against the level of investment return, inclusive of hedging costs, provided to policyholders.

Investment Book Yield
Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. The Predecessor considered this non-GAAP financial measure to be useful internally and to investors and analysts when assessing the level of returned on their income generating invested assets.

7

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


FGL HOLDINGS
Consolidated Financial Highlights

 
Three Months Ended
 
One Month Ended
 
 
Two Months Ended
 
Three Months Ended
 
March 31,
2018
 
December 31,
2017
 
 
November 30,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
 
Predecessor
 
(Unaudited)
 
(Unaudited)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Dollars in millions, except per share data)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Premiums
$
18

 
$
3

 
 
$
7

 
$
16

 
$
12

 
$
3

Net investment income
263

 
92

 
 
174

 
261

 
257

 
247

Net investment gains (losses)
(191
)
 
42

 
 
146

 
117

 
67

 
81

Insurance and investment product fees and other
41

 
28

 
 
35

 
41

 
44

 
44

Total revenues
131

 
165

 
 
362

 
435

 
380

 
375

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
52

 
$
(102
)
 
 
$
28

 
$
61

 
$
32

 
$
22

Adjusted Operating Income ("AOI") (1)
$
68

 
$
3

 
 
$
36

 
$
65

 
$
42

 
$
38

Dividends on preferred stock
(7
)
 
(2
)
 
 

 

 

 

AOI available to common shareholders
61

 
1

 
 
36

 
65

 
42

 
38

 
 
 
 
 
 
 
 
 
 
 
 
 
Per Unrestricted Common Shares Amounts:
 
 
 
 
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income available to common shareholders
$
0.21

 
$
(0.49
)
 
 
$
0.48

 
$
1.06

 
$
0.54

 
$
0.38

AOI available to common shareholders (1)
$
0.28

 
$

 
 
$
0.62

 
$
1.11

 
$
0.72

 
$
0.65

Diluted:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income available to common shareholders
$
0.21

 
$
(0.49
)
 
 
$
0.47

 
$
1.06

 
$
0.54

 
$
0.38

AOI available to common shareholders (1)
$
0.28

 
$

 
 
$
0.62

 
$
1.11

 
$
0.72

 
$
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends Paid to Common Shareholders Per Share
$

 
$

 
 
$
0.065

 
$
0.065

 
$
0.065

 
$
0.065

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

8

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

 
Three Months Ended
 
One Month Ended
 
 
Two Months Ended
 
Three Months Ended
 
March 31,
2018
 
December 31,
2017
 
 
November 30,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
 
Predecessor
 
(Unaudited)
 
(Unaudited)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
At Period End
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,157

 
$
1,215

 
 
$
924

 
$
885

 
$
799

 
$
887

Total investments
$
23,232

 
$
23,604

 
 
$
23,326

 
$
23,072

 
$
22,627

 
$
21,813

Total assets
$
29,665

 
$
29,929

 
 
$
29,227

 
$
28,965

 
$
28,402

 
$
27,897

Contractholder funds
$
22,083

 
$
21,844

 
 
$
21,083

 
$
20,792

 
$
20,342

 
$
20,052

Future policy benefits
$
4,711

 
$
4,751

 
 
$
3,401

 
$
3,412

 
$
3,423

 
$
3,435

Debt (including revolving credit facility)
$
442

 
$
412

 
 
$
405

 
$
405

 
$
405

 
$
405

Total equity
$
1,642

 
$
1,952

 
 
$
2,284

 
$
2,247

 
$
2,113

 
$
1,908

Total equity excluding Accumulated Other Comprehensive Income (AOCI)
$
1,920

 
$
1,877

 
 
$
1,729

 
$
1,704

 
$
1,646

 
$
1,617

Common shares issued and outstanding
214.37

 
214.37

 
 
59.00

 
58.93

 
58.99

 
58.99

 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Book value per common share (1)
$
5.87

 
$
7.35

 
 
$
38.71

 
$
38.13

 
$
35.82

 
$
32.34

GAAP Book value per common share excluding AOCI (1)
$
7.17

 
$
7.00

 
 
$
29.31

 
$
28.92

 
$
27.90

 
$
27.41

Debt to total Capitalization excluding AOCI (1)
18.7
%
 
18.0
%
 
 
19.0
%
 
19.2
%
 
19.7
%
 
20.0
%
Return on average common shareholders' equity excluding AOCI (1)
11.9
%
 
N/M

 
 
6.5
%
 
14.6
%
 
7.8
%
 
5.5
%
Statutory Book value per share (1)
$
8.04

 
$
8.00

 
 
$
25.91

 
$
25.91

 
$
25.18

 
$
26.06

Statutory Book value per share excluding IMR and AVR (1)
$
10.71

 
$
10.66

 
 
$
34.99

 
$
34.99

 
$
34.30

 
$
35.28

(1) Refer to "Non-GAAP Financial Measures" for further details
N/M - Not meaningful

9

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

FGL HOLDINGS
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
 
March 31,
2018
 
December 31,
2017
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
 
(Unaudited)
 
(Unaudited)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
ASSETS
 
 
 
 
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2018 - $21,738; December 31, 2017 - $21,475)
$
21,366

 
$
21,590

 
 
$
21,154

 
$
20,766

 
$
20,052

Equity securities, at fair value (amortized cost: March 31, 2018 - $780; December 31, 2017 - $764)
769

 
761

 
 
773

 
774

 
712

Derivative investments
293

 
492

 
 
413

 
361

 
351

Short term investments

 
25

 
 

 

 

Commercial mortgage loans
528

 
548

 
 
547

 
550

 
579

Other invested assets
276

 
188

 
 
185

 
176

 
119

Total investments
23,232

 
23,604

 
 
23,072

 
22,627

 
21,813

Related party loans

 

 
 
71

 
71

 
71

Cash and cash equivalents
1,157

 
1,215

 
 
885

 
799

 
887

Accrued investment income
240

 
211

 
 
231

 
204

 
225

Funds withheld for reinsurance receivables at fair value
748

 
756

 
 

 

 

Reinsurance recoverable
2,495

 
2,494

 
 
3,375

 
3,390

 
3,426

Intangibles, net
954

 
856

 
 
1,129

 
1,097

 
1,184

Deferred tax assets, net
258

 
176

 
 

 

 
87

Goodwill
476

 
476

 
 

 

 

Other assets
105

 
141

 
 
202

 
214

 
204

Total assets
$
29,665

 
$
29,929

 
 
$
28,965

 
$
28,402

 
$
27,897

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

10

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

 
March 31,
2018
 
December 31,
2017
 
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
Contractholder funds (a)
$
22,083

 
$
21,844

 
 
$
20,792

 
$
20,342

 
$
20,052

Future policy benefits, including $712 and $728 at fair value at March 31, 2018 and December 31, 2017, respectively (b)
4,711

 
4,751

 
 
3,412

 
3,423

 
3,435

Funds withheld for reinsurance liabilities

 

 
 
1,083

 
1,106

 
1,134

Liability for policy and contract claims (c)
70

 
78

 
 
67

 
57

 
60

Debt
307

 
307

 
 
300

 
300

 
300

Revolving credit facility
135

 
105

 
 
105

 
105

 


Deferred tax liability, net

 

 
 
62

 
11

 

Other liabilities
717

 
892

 
 
897

 
945

 
903

Total liabilities
28,023

 
27,977

 
 
26,718

 
26,289

 
25,989

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock ($.0001 par value, 100,000,000 shares authorized, 377,417 and 375,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively)

 

 
 

 

 

Common stock ($.0001 par value, 800,000,000 shares authorized, 214,370,000 issued and outstanding at March 31, 2018 and December 31, 2017, respectively)

 

 
 
1

 
1

 
1

Additional paid-in capital
2,039

 
2,037

 
 
716

 
716

 
715

(Accumulated deficit) Retained earnings
(119
)
 
(160
)
 
 
1,000

 
942

 
914

Accumulated other comprehensive (loss) income
(278
)
 
75

 
 
543

 
467

 
291

Treasury stock, at cost (no shares at March 31, 2018; no shares at December 31, 2017)

 

 
 
(13
)
 
(13
)
 
(13
)
Total shareholders' equity
1,642

 
1,952

 
 
2,247

 
2,113

 
1,908

Total liabilities and shareholders' equity
$
29,665

 
$
29,929

 
 
$
28,965

 
$
28,402

 
$
27,897

 
 
 
 
 
 
 
 
 
 
 
Equity attributable to preferred shareholders (1)
$
384

 
$
377

 
 
$

 
$

 
$

(1) Refer to "Non-GAAP Financial Measures" for further details
(a) Contractholder funds include amounts on deposit for annuity and universal life contracts plus the fair value of future index credits and guarantees on our FIA and IUL products.
(b) Future policy benefits include the present value of future benefits on our traditional life insurance products and life contingent SPIA contracts.
(c) Liability for policy and contract claims represents policyholder pending claims.


11

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Quarterly Summary - Most Recent 5 Quarters
 
Three Months Ended
 
One Month Ended
 
 
Two Months Ended
 
Three Months Ended
 
March 31,
2018
 
December 31,
2017
 
 
November 30,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
 
Predecessor
 
(Unaudited)
 
(Unaudited)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Dollars in millions, except per share data)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Traditional life insurance premiums
$
9

 
$
3

 
 
$
6

 
$
10

 
$
7

 
$

Life contingent immediate annuity
9

 

 
 
1

 
6

 
5

 
3

Net investment income
263

 
92

 
 
174

 
261

 
257

 
247

Net investment gains (losses)
(191
)
 
42

 
 
146

 
117

 
67

 
81

Surrender charges
14

 
3

 
 
10

 
9

 
9

 
9

Cost of insurance fees and other income
27

 
25

 
 
25

 
32

 
35

 
35

Total revenues
131

 
165

 
 
362

 
435

 
380

 
375

Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Traditional life insurance policy benefits and change in future policy benefits
18

 
7

 
 
12

 
18

 
21

 
11

Life contingent immediate annuity benefits and changes in future policy benefits
18

 
11

 
 
13

 
26

 
20

 
18

Interest sensitive and index product benefits and changes in future policy benefits
(54
)
 
123

 
 
202

 
276

 
194

 
239

General expenses
35

 
11

 
 
47

 
30

 
35

 
30

Acquisition expenses
54

 
27

 
 
44

 
65

 
72

 
81

Deferred acquisition costs ("DAC")
(49
)
 
(22
)
 
 
(40
)
 
(59
)
 
(67
)
 
(78
)
Amortization of intangibles
16

 
1

 
 
36

 
(14
)
 
51

 
33

        Total benefits and expenses
38

 
158

 
 
314

 
342

 
326

 
334

Operating income
93

 
7

 
 
48

 
93

 
54

 
41

Interest expense
(6
)
 
(2
)
 
 
(4
)
 
(6
)
 
(6
)
 
(6
)
Income before income taxes
87

 
5

 
 
44

 
87

 
48

 
35

Income tax expense
(35
)
 
(107
)
 
 
(16
)
 
(26
)
 
(16
)
 
(13
)
Net income (loss)
$
52

 
$
(102
)
 
 
$
28

 
$
61

 
$
32

 
$
22

Less Preferred stock dividend
7

 
2

 
 

 

 

 

Net income (loss) available to common shareholders
45

 
(104
)
 
 
28

 
61

 
32

 
22

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to common shareholders per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.21

 
$
(0.49
)
 
 
$
0.48

 
$
1.06

 
$
0.54

 
$
0.38

Diluted
$
0.21

 
$
(0.49
)
 
 
$
0.47

 
$
1.06

 
$
0.54

 
$
0.38

Weighted average common shares used in computing net income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
214.37

 
214.37

 
 
58.34

 
58.34

 
58.34

 
58.33

Diluted
214.37

 
214.37

 
 
58.49

 
58.48

 
58.44

 
58.38



12

FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


Reconciliation from Net (Loss) Income to Adjusted Operating Income ("AOI ")
 
Three Months Ended
 
One Month Ended
 
 
Two Months Ended
 
Three Months Ended
 
March 31,
2018
 
December 31,
2017
 
 
November 30,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
 
Successor
 
Successor
 
 
Predecessor
 
Predecessor
 
Predecessor
 
Predecessor
 
(Unaudited)
 
(Unaudited)
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Dollars in millions, except per share data)
Net income (loss)
$
52

 
$
(102
)
 
 
$
28

 
$
61

 
$
32

 
$
22

Adjustments to arrive at AOI:
 
 
 
 
 
 
 
 
 
 
 
 
Effect of investment losses (gains), net of offsets (a)
39

 

 
 
(6
)
 
(5
)
 
4

 
15

Effect of change in FIA embedded derivative discount rate, net of offsets (a) (b)

 
6

 
 
(10
)
 
3

 
(4
)
 
(2
)
Effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging costs (a)
(46
)
 

 
 

 

 

 

Effect of change in fair value of reinsurance related embedded derivative, net of offsets (a) (c)

 

 
 
(1
)
 
5