FG - F&G Annuities & Life: Solid Q1 Despite Mixed Alternative Returns

2024-05-10 23:20:44 ET

Summary

• F&G Annuities & Life has seen a significant rise in its stock price over the past year, driven by higher rates and strong investment returns.
• The company reported solid quarterly results, but alternative investment returns were weaker, leading to modest profit taking by investors.
• F&G has benefited from increased demand for annuities in the elevated interest rate environment, with gross sales rising by 6%.
• With its aggressive investment portfolio, F&G earns a strong investment spread, but credit losses could rise in a recession.

Shares of F&G Annuities & Life ( FG ) have been a tremendous performer over the past year, rising over 140% as higher rates and strong investment returns have buoyed its financial performance. On Wednesday, the company reported solid quarterly results, and we have seen modest profit taking in response, given its large run. I last covered FG in November , rating shares a buy. Since then, the stock has rallied about 9%, a solid total return, though this has lagged the market’s 18% rally. I saw about 13% upside in the stock, alongside its 2% dividend for about a 15% total return opportunity. With much of this realized, now is a good time to revisit FG. I continue to be bullish....

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