FG - F&G Annuities & Life: Extremely Cheap Despite Damaged Credibility

2025-05-29 06:18:20 ET

Summary

• F&G shares have underperformed due to a surprise equity issuance and weak Q1 results, raising doubts about management's strategy and near-term earnings power.
• Q1 earnings missed expectations, with disappointing investment spreads, lower sales, and ongoing headwinds from reduced policy surrenders and alternative asset underperformance.
• Despite these setbacks, F&G maintains a conservative liability profile, high-quality investment portfolio, and a secure dividend, trading at a significant discount-to-book value.
• While investor confidence is shaken, I see 25% upside as temporary pressures fade, making F&G a patient buy for value-oriented investors.

Shares of F&G Annuities & Life ( FG ) have been a disappointing performer over the past year, losing over 20% of their value. Problems began in March when the company surprisingly issued equity, sending shares lower. A weaker than expected Q1 exacerbated the situation in early May, pushing shares to a new 52-week low. I last covered shares in March, when I upgraded F&G to a “ buy ” following its equity issuance. That call has proven premature with shares declining 9%. With updated financials, now is a good time to revisit F&G....

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