F&G Annuities & Life, Inc. (NYSE:FG) Q2 2023 Earnings Conference Call August 9, 2023 9:00 AM ET
Company Participants
Chris Blunt - President & Chief Executive Officer
Wendy Young - Chief Financial Officer
Conference Call Participants
Mark Hughes - Truist Securities
A.J. Hayes - Stephens
Chris Blunt
[Abrupt Start]
Our first half results reflect these established and newer capital-light strategies and we've generated record gross sales whilst maintaining pricing discipline. Our gross sales were $6.3 billion in the first half, up 11% over the prior year. We're on track with our stated goal of growing annual gross sales at a double-digit clip. And with net sales of $4.4 billion in the first half, we are on track with our stated goal of managing net sales retained above the $6 billion to $7 billion annual level that continues to grow our retained AUM.
Next looking at the quarter's results more closely. We reported gross sales of $3 billion in the second quarter, a decrease of 3% from the prior year quarter due to lumpy institutional sales with a 9% decrease over the sequential first quarter, which reflected a record level of sales boosted by the effects of market volatility and the US regional bank crisis.
Retail channel sales were $2.3 billion in the second quarter, an increase of 5% over $2.2 billion in the second quarter of 2022. This reflects our fifth consecutive quarter of retail channel sales exceeding $2 billion driven by continued strong consumer demand for our products.
Fixed annuities are an attractive solution for consumers given their relatively higher rates, guaranteed growth, principal protection and tax-advantaged accumulation and annuitization options. Our sales mix was consistent across the three retail channels including agent, bank and broker dealer in the second quarter as compared to the prior year.
Institutional market sales were nearly $700 million in the second quarter comprised of $500 million of pension risk transfers and $200 million funding agreements compared to nearly $900 million in the second quarter of 2022 solely comprised of funding agreements.
Funding agreement activity in the second quarter was driven by FHLB transactions as current market conditions remain challenging for funding agreement-backed notes issuances. For the first six months of 2023 this brings our institutional market sales to $1.2 billion and with six months to go we are on track with our annual target of $2 billion.
F&G's net sales retained were $2.2 billion in the second quarter as compared to $2.5 billion for the prior year quarter. This expected trend reflects the attractiveness of third-party flow reinsurance, which increased from 50% to 75% of MYGA sales in September of 2022.