EX-99.2 3 a3312018fglfinancialsupple.htm EXHIBIT 99.2 Exhibit
Exhibit 99.2

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

 
8

 
8

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

 
(8
)
 
 
29

 
2

 
5

 
2

Net impact of Tax Cuts and Jobs Act
—

 
131

 
 
—

 
—

 
—

 
—

Tax effect of affiliated reinsurance embedded derivative
15

 
(20
)
 
 
—

 
—

 
—

 
—

Tax impact of adjusting items
—

 
(4
)
 
 
(4
)
 
(1
)
 
(3
)
 
(7
)
AOI
$
68

 
$
3

 
 
$
36

 
$
65

 
$
42

 
$
38

Dividends on preferred stock
(7
)
 
(2
)
 
 
—

 
—

 
—

 
—

AOI available to common shareholders (1)
$
61

 
$
1

 
 
$
36

 
$
65

 
$
42

 
$
38

 
 
 
 
 
 
 
 
 
 
 
 
 
Per diluted common share:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income available to common shareholders
$
0.21

 
$
(0.49
)
 
 
$
0.47

 
$
1.06

 
$
0.54

 
$
0.38

Adjustments to arrive at AOI:
 
 
 
 
 
 
 
 
 
 
 
 
Effect of investment (gains) losses, net of offsets (a)
0.18

 
—

 
 
(0.10
)
 
(0.09
)
 
0.07

 
0.26

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

 
0.03

 
 
(0.17
)
 
0.05

 
(0.07
)
 
(0.04
)
Effect of changes in fair values of FIA related derivatives and embedded derivatives, net of hedging costs (a)
(0.22
)
 
—

 
 
—

 
—

 
—

 
—

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

 
—

 
 
(0.02
)
 
0.09

 
0.14

 
0.14

Effect of integration, merger related & other non-operating items
0.04

 
(0.04
)
 
 
0.50

 
0.02

 
0.09

 
0.03

Net impact of Tax Cuts and Jobs Act
—

 
0.61

 
 
—

 
—

 
—

 
—

Tax effect of affiliated reinsurance embedded derivative
0.07

 
(0.09
)
 
 
—

 
—

 
—

 
—

Tax impact of adjusting items
—

 
(0.02
)
 
 
(0.06
)
 
(0.02
)
 
(0.05
)
 
(0.12
)
AOI available to common shareholders per diluted share
$
0.28

 
$
—

 
 
$
0.62

 
$
1.11

 
$
0.72

 
$
0.65

(a) Amounts are net of offsets related to value of business acquired ("VOBA"), deferred acquisition cost ("DAC") and deferred sale inducement ("DSI") amortization.
(b) Adjustment is not applicable to for the quarter ended March 31, 2018 as the updated definition of AOI removes the impact of fair value accounting on FIA products.
(c) Adjustment is not applicable Business Combination as the reinsurance agreement and related activity are eliminated via consolidation for U.S. GAAP reporting.

13
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


Summary of Adjustments to Arrive at 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)
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Insurance and investment product fees and other (a)
$
—

 
$
(12
)
 
 
$
—

 
$
—

 
$
—

 
$
—

Net investment gains (b)
163

 
—

 
 
(8
)
 
1

 
15

 
28

Increase (decrease) in total revenues
163

 
(12
)
 
 
(8
)
 
1

 
15

 
28

 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits and expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Benefits and other changes in policy reserves (c)
(167
)
 
7

 
 
(19
)
 
12

 
(10
)
 
(1
)
Acquisition and operating expenses, net of deferrals
8

 
4

 
 
29

 
2

 
5

 
2

Amortization of intangibles (d)
(3
)
 
(1
)
 
 
10

 
(10
)
 
3

 
(6
)
(Decrease) increase in total benefits and expenses
(162
)
 
10

 
 
20

 
4

 
(2
)
 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in pre-tax operating income
1

 
(2
)
 
 
12

 
5

 
13

 
23

 
 
 
 
 
 
 
 
 
 
 
 
 
(Decrease) increase in income tax expense (benefit) (e)
15

 
107

 
 
(4
)
 
(1
)
 
(3
)
 
(7
)
Increase (decrease) in net income
$
16

 
$
105

 
 
$
8

 
$
4

 
$
10

 
$
16


(a) Insurance and investment product fees and other: includes the effect of contract fee termination.
(b) Net investment gains: includes the effect of net investment gains, changes in fair values of FIA related derivatives and embedded derivatives, net of hedging costs. For the Predecessor, effects of net investment gains the change in fair value of the reinsurance related embedded derivative.
(c) Benefits and other changes in policy reserves: includes the effects of the changes in fair values of FIA embedded derivatives
(d) Amortization of intangibles includes the impact on DAC, VOBA, and DSI of the adjustments in b-c above.
(e) The tax expense (benefit) includes the tax impact of the adjustments in a-d above, and for the Successor only, the impact of tax reform and the impact of affiliated reinsurance embedded derivative.

14
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Notable Items Included in Net Income and AOI

Each quarterly reporting period, we identify notable items that help explain the trends in our Net Income and AOI.  These items are infrequent in nature or involve accounting volatility under general accepted accounting principles. The amounts below are included in disclosures within the Company's earnings releases to explain our Net Income and AOI results.  We believe that understanding these items provides further clarity to the financial performance of the business.   
 
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)
Net income
$
52

 
$
(102
)
 
 
$
28

 
$
61

 
$
32

 
$
22

 
 
 
 
 
 
 
 
 
 
 
 
 
AOI
$
68

 
$
3

 
 
$
36

 
$
65

 
$
42

 
$
38

Notable Items (Not Trendable) Included within AOI [(unfavorable)/favorable]
 
 
 
 
 
 
 
 
 
 
 
 
Legacy incentive compensation (a)
—

 
—

 
 
—

 
—

 
(1
)
 
(1
)
Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (b)
8

 
(2
)
 
 
1

 
(2
)
 
2

 
3

Assumption review & DAC, VOBA and DSI unlocking (c)
—

 
(9
)
 
 
4

 
21

 
—

 
(3
)
Other, including bond prepayment income & tax valuation allowance (d)
—

 
—

 
 
—

 
2

 
—

 
—

(a) Change in certain long term incentive compensation costs, including the change in the liability for our FGLH stock compensation plan, which as a liability plan, is settled in cash and accounted for at fair value each reporting period (Predecessor only).
(b) The release of annuity reserves associated with mortality of annuitants, which varies due to timing, volume and severity of experience, and other reserve adjustments.
(c) Reflects unlocking from updating our DAC, VOBA and DSI amortization models for actual experience and equity market fluctuations. Also, annually in the 4th fiscal quarter, we complete our Annual Assumption Review & Unlocking process by adjusting our valuation assumptions to align with actual experience.
(d) Bond prepayment income, changes in tax valuation, and other allowances related to reinsurance and agent debt, reinsurance settlements and other net favorable activity.

15
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Capitalization/Book Value per Share

 
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)
 
(Dollars in millions, except per share data)
Capitalization:
 
 
 
 
 
 
 
 
 
 
Debt
$
442

 
$
412

 
 
$
405

 
$
405

 
$
405

Total debt
442

 
412

 
 
405

 
405

 
405

Total shareholders' equity
1,642

 
1,952

 
 
2,247

 
2,113

 
1,908

Total capitalization
2,084

 
2,364

 
 
2,652

 
2,518

 
2,313

AOCI
(278
)
 
75

 
 
543

 
467

 
291

Total capitalization excluding AOCI (1)
$
2,362

 
$
2,289

 
 
$
2,109

 
$
2,051

 
$
2,022

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity
1,642

 
1,952

 
 
2,247

 
2,113

 
1,908

Equity available to preferred shareholders
384

 
377

 
 
—

 
—

 
—

Common shareholders' equity
1,258

 
1,575

 
 
2,247

 
2,113

 
1,908

AOCI
(278
)
 
75

 
 
543

 
467

 
291

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

 
$
1,500

 
 
$
1,704

 
$
1,646

 
$
1,617

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
214.37

 
214.37

 
 
58.93

 
58.99

 
58.99

 
 
 
 
 
 
 
 
 
 
 
Book Value per Share: (1)
 
 


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

 
$
7.35

 
 
$
38.13

 
$
35.82

 
$
32.34

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

 
$
7.00

 
 
$
28.92

 
$
27.90

 
$
27.41

 
 
 
 
 
 
 
 
 
 
 
 
Twelve months ended
Twelve Month Rolling Average Return on Equity ("ROE")
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)
Return on Common Shareholders' Equity (1)
 
 
 
 
 
 
 
 
 
 
Return on average common shareholders' equity
12.7
%
 
N/M

 
 
11.2
%
 
10.1
%
 
9.6
%
Return on average common shareholders' equity, excluding AOCI (1)
11.9
%
 
N/M

 
 
13.8
%
 
12.3
%
 
11.1
%
 
 
 
 
 
 
 
 
 
 
 
Return on Common Shareholders' Equity - AOI (1)
 
 
 
 
 
 
 
 
 
 
Adjusted Operating return on common shareholders' equity, excluding AOCI (1)
16.1
%
 
0.9
%
 
 
11.5
%
 
10.3
%
 
11.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
Quarterly Average ROE
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)
Return on average common shareholders' equity
12.7
%
 
N/M

 
 
11.2
%
 
6.4
%
 
4.8
%
Return on average common shareholders' equity, excluding AOCI (1)
11.9
%
 
N/M

 
 
14.6
%
 
7.8
%
 
5.5
%
Adjusted Operating return on common shareholders' equity, excluding AOCI (1)
16.1
%
 
0.9
%
 
 
15.5
%
 
10.3
%
 
9.5
%
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
Debt-to-Capital Ratios: (1)
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)
Total Debt to Capitalization, excluding AOCI (1)
18.7
%
 
18.0
%
 
 
19.2
%
 
19.7
%
 
20.0
%
Rating Agency Adjusted Debt to Capitalization, excluding AOCI (1)
26.8
%
 
26.2
%
 
 
19.2
%
 
19.7
%
 
20.0
%
(1) Refer to "Non-GAAP Financial Measures" for further details
N/M - Not meaningful.


17
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)



Financial Strength Ratings

 
 
A.M. Best
 
Fitch
 
Moody's
 
S&P
Holding Companies
 
 
 
 
 
 
 
 
FGL Holdings
 
 
 
 
 
 
 
 
Issuer Credit / Default Rating
 
Not Rated
 
BB+
 
Ba3
 
BB+
Outlook
 
 
 
Stable
 
Stable
 
Positive
CF Bermuda Holdings Limited
 
 
 
 
 
 
 
 
Issuer Credit / Default Rating
 
Not Rated
 
BB+
 
Ba2
 
BB+
Outlook
 
 
 
Stable
 
Stable
 
Positive
Fidelity &Guaranty Life Holdings, Inc.
 
 
 
 
 
 
 
 
Issuer Credit / Default Rating
 
bb+
 
BB+
 
Not Rated
 
BB+
Outlook
 
Positive
 
Stable
 
Not Rated
 
Positive
Senior Unsecured Notes
 
bb+
 
BB
 
Ba2
 
BB+
Outlook
 
Positive
 
Stable
 
Stable
 
 
 
 
 
 
 
 
 
 
 
Insurance Subsidiaries
 
 
 
 
 
 
 
 
F&G Re Ltd
 
 
 
 
 
 
 
 
Financial Strength Rating
 
Not Rated
 
BBB
 
Baa2
 
BBB+
Outlook
 
 
 
Stable
 
Stable
 
Stable
Fidelity & Guaranty Life Insurance Company
 
 
 
 
 
 
 
 
Financial Strength Rating
 
B++
 
BBB
 
Baa2
 
BBB+
Outlook
 
Positive
 
Stable
 
Stable
 
Stable
Fidelity & Guaranty Life Insurance Company of New York
 
 
 
 
 
 
 
 
Financial Strength Rating
 
B++
 
BBB
 
Not Rated
 
BBB+
Outlook
 
Positive
 
Stable
 
Not Rated
 
Stable
*Reflects current ratings and outlooks as of date of filing
 
 
 
 
 
 
 
 



18
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Net Investment Spread Results
(Dollars in millions)
Three Months Ended
 
March 31, 2018
 
 
March 31, 2017
 
Successor
 
 
Predecessor
 
(Unaudited)
 
 
(Unaudited)
Yield on average assets under management "AAUM" (1)
4.21
 %
 
 
4.90
 %
Less: Interest credited and option cost
(2.33
)%
 
 
(2.49
)%
Total net investment spread - All product lines (1)
1.88
 %
 
 
2.41
 %
 
 
 
 
 
FIA net investment spread
2.34
 %
 
 
3.05
 %
 
 
 
 
 
Investment book yield - bonds purchased during the period (1)
4.99
 %
 
 
5.22
 %
 
 
 
 
 
AAUM (1)
$
24,967

 
 
$
20,162

(1) Refer to "Non-GAAP Financial Measures" for further details


 
 


 
 
 
 
 


Sales Results by Product

(Dollars in millions)
Three Months Ended
 
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)
Fixed index annuities ("FIA")
$
436

 
$
462

 
 
$
424

 
$
455

 
$
438

Fixed rate annuities ("MYGA")
142

 
161

 
 
164

 
127

 
158

Institutional spread based (1)
200

 
—

 
 
—

 
—

 
136

Total Annuity
$
778

 
$
623

 
 
$
588

 
$
582

 
$
732

Index universal life
6

 
7

 
 
6

 
9

 
14

ULIC (FSR International)
33

 
8

 
 
—

 
—

 
—

Total Sales
$
817

 
$
638

 
 
$
594

 
$
591

 
$
746

(1) Institutional spread based product sales from funding agreement investment contracts issued with the Federal Home Loan Bank and held in our separate account.



19
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


Annuity Account Balance Rollforward (a)

(Dollars in millions)
Three months ended

 
One month ended (b)
 
 
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)
Account balances at beginning of period:
$
18,041

 
$
17,892

 
 
$
16,819

 
$
16,430

 
$
16,114

 
$
15,603

Net deposits
548

 
223

 
 
404

 
598

 
591

 
603

Premium and interest bonuses
14

 
5

 
 
9

 
11

 
12

 
12

Fixed interest credited and index credits
177

 
71

 
 
130

 
147

 
154

 
153

Guaranteed product rider fees
(22
)
 
(8
)
 
 
(14
)
 
(17
)
 
(18
)
 
(18
)
Surrenders, withdrawals, deaths, etc.
(432
)
 
(142
)
 
 
(256
)
 
(350
)
 
(423
)
 
(239
)
Account balance at end of period
$
18,326

 
$
18,041

 
 
$
17,092

 
$
16,819

 
$
16,430


$
16,114

(a) The rollforward reflects the vested account balance of our fixed index annuities and fixed rate annuities, net of reinsurance.
(b) Beginning balance as of December 1, 2017 is inclusive of FSR after the Business Combination was completed and therefore does not agree to the November 30, 2017 ending balance.
Annuity Deposits by Product Type

 
Three Months Ended
Product Type
March 31, 2018
 
 
March 31, 2017
 
Successor
 
 
Predecessor
 
(Unaudited)
 
 
(Unaudited)
 
(Dollars in millions)
Fixed Index Annuities:
 
 
 
 
Index Strategies
$
336

 
 
$
349

Fixed Strategy
68

 
 
94

 
404

 
 
443

 
 
 
 
 
Fixed Rate Annuities:
 
 
 
 
Single-Year Rate Guaranteed
1

 
 
2

Multi-Year Rate Guaranteed
143

 
 
159

 
 
 
 
 
Total before coinsurance ceded
548

 
 
604

Coinsurance ceded
—

 
 
1

Net after coinsurance ceded
$
548

 
 
$
603


20
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)




Surrender Charge Protection and Account Values by Product Type
Annuity Surrender Charges and Account Values (net of reinsurance) at March 31, 2018 (unaudited):
 
 
Surrender Charge
 
Net Account Value
 
 
(Unaudited)
Product Type
 
Avg. Years at Issue
 
Avg. Years Remaining
 
Avg. % Remaining
 
Dollars in millions
 
%
Fixed Index Annuities
 
11
 
6
 
8
%
 
$
14,339

 
78
%
Single-Year Rate Guaranteed
 
10
 
1
 
1
%
 
621

 
3
%
Multi-Year Rate Guaranteed
 
5
 
4
 
7
%
 
3,366

 
19
%
Total
 
 
 
 
 
 
 
$
18,326

 
100
%



21
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)



Annuity Liability Characteristics

 
 
Fixed Annuities Account Value
 
Fixed Index Annuities Account Value
 
 
(Unaudited)
 
 
(Dollars in millions)
SURRENDER CHARGE PERCENTAGES:
 
 
 
 
No surrender charge
 
$
768

 
$
2,229

0.0% < 2.0%
 
22

 
317

2.0% < 4.0%
 
29

 
279

4.0% < 6.0%
 
730

 
773

6.0% < 8.0%
 
644

 
2,019

8.0% < 10.0%
 
1,760

 
2,700

10.0% or greater
 
34

 
6,022

 
 
$
3,987

 
$
14,339


 
 
Fixed and Fixed Index Annuities Account Value
 
Weighted Average Surrender Charge
 
 
(Unaudited)
 
 
(Dollars in millions)
 
 
SURRENDER CHARGE EXPIRATION BY YEAR:
 
 
 
 
Out of surrender charge
 
$
2,896

 
—
%
2018
 
1,015

 
5
%
2019 - 2020
 
3,137

 
7
%
2021 - 2022
 
2,674

 
8
%
2023 - 2024
 
2,722

 
9
%
Thereafter
 
5,882

 
11
%
 
 
$
18,326

 
8
%


22
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

 
 
Fixed Annuities Account Value
 
Fixed Index Annuities Account Value
 
 
(Unaudited)
 
 
(Dollars in millions)
CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL:
 
 
 
 
No differential
 
$
1,037

 
$
1,413

0.0% - 1.0%
 
392

 
1,274

1.0% - 2.0%
 
321

 
50

2.0% - 3.0%
 
2,216

 
13

3.0% - 4.0%
 
21

 
—

Allocated to index strategies
 
—

 
11,589

 
 
$
3,987

 
$
14,339

    
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES

Monthly Average, Point to Point and Gain Trigger Strategies with Cap

 
 
Minimum Guaranteed Cap
 
 
(Unaudited)
 
 
1%
 
2%
 
3%
 
5%
 
6%
Current Cap
 
(Dollars in millions)
At minimum
 
$
—

 
$
—

 
$
1,623

 
$
644

 
$
1

 2-3%
 
761

 
—

 
—

 
—

 
—

 3-4%
 
1,113

 
—

 
375

 
—

 
—

 4-5%
 
447

 
—

 
361

 
—

 
—

 5-6%
 
83

 
2

 
104

 
4

 
—

 6-7%
 
47

 
3

 
25

 
—

 
6

 7% +
 
69

 
40

 
191

 
—

 
71

Total:
 
$
2,520

 
$
45

 
$
2,679

 
$
648

 
$
78

    







23
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)



Monthly Point-to-Point with Cap
 
 
Minimum Guaranteed Cap 1%
 
 
(Unaudited)
Current Cap
 
(Dollars in millions)
At minimum
 
$
1,725

 1% to 2%
 
2,620

 2% to 3%
 
646

 3% +
 
108

 Total:
 
$
5,099


3 Year Step Forward with Cap
 
 
Minimum Guaranteed Cap 2%
 
Minimum Guaranteed Cap 5%
 
 
(Unaudited)
Current Cap
 
(Dollars in millions)
At minimum
 
$
—

 
$
20

 2% to 5%
 
2

 
—

 5% to 7%
 
11

 
51

 7% to 9%
 
—

 
42

 9% to 11%
 
—

 
18

 11% to 13%
 
—

 
9

 Total:
 
$
13

 
$
140

There is an additional $367 million Account Value allocated to strategies not listed above. Of this $367 million, $14 million is at the guaranteed rates.











24
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)




Summary of Invested Assets by Asset Class

(Dollars in millions)
 
March 31, 2018
 
 
December 31, 2017
 
 
Successor
 
 
Successor
 
 
(Unaudited)
 
 
(Unaudited)
 
 
Amortized Cost
 
Fair Value
 
Percent
 
 
Amortized Cost
 
Fair Value
 
Percent
Fixed maturity securities, available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
    United States Government full faith and credit
 
$
161

 
$
160

 
1
%
 
 
$
84

 
$
84

 
1
%
    United States Government sponsored entities
 
119

 
118

 
1
%
 
 
123

 
122

 
1
%
    United States municipalities, states and territories
 
1,733

 
1,710

 
7
%
 
 
1,736

 
1,747

 
7
%
Corporate securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
    Finance, insurance and real estate
 
5,238

 
5,118

 
22
%
 
 
5,898

 
5,930

 
25
%
    Manufacturing, construction and mining
 
1,030

 
1,011

 
4
%
 
 
988

 
996

 
4
%
    Utilities, energy and related sectors
 
2,577

 
2,522

 
11
%
 
 
2,260

 
2,278

 
10
%
    Wholesale/retail trade
 
1,626

 
1,584

 
7
%
 
 
1,448

 
1,457

 
6
%
    Services, media and other
 
2,908

 
2,849

 
12
%
 
 
2,320

 
2,354

 
10
%
Hybrid securities
 
1,230

 
1,204

 
5
%
 
 
1,445

 
1,446

 
6
%
Non-agency residential mortgage-backed securities
 
1,116

 
1,114

 
5
%
 
 
1,156

 
1,155

 
5
%
Commercial mortgage-backed securities
 
938

 
924

 
4
%
 
 
956

 
956

 
4
%
Asset-backed securities
 
3,062

 
3,052

 
13
%
 
 
3,061

 
3,065

 
13
%
Equity securities
 
830

 
769

 
4
%
 
 
764

 
761

 
3
%
Commercial mortgage loans
528

 
526

 
2
%
 
 
548

 
549

 
2
%
Other (primarily derivatives)
 
614

 
565

 
2
%
 
 
647

 
678

 
3
%
Short term investments
—

 
—

 
—
%
 
 
25

 
25

 
—
%
Total (a)
 
$
23,710

 
$
23,226

 
100
%
 
 
$
23,459

 
$
23,603

 
100
%
(a) Asset duration, including cash and cash equivalents, of 7.67 years and 6.72 years vs. liability duration of 6.62 years and 6.76 years for the periods ending March 31, 2018 and December 31, 2017, respectively

25
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)


Credit Quality of Fixed Maturity Securities at March 31, 2018 (unaudited)
NAIC Designation
 
Fair Value
 
Percent
 
Rating Agency Rating
 
Fair Value
 
Percent
 
 
(Dollars in millions)
 
 
 
 
 
(Dollars in millions)
 
 
1
 
$
10,342

 
48
%
 
AAA
 
$
1,838

 
9
%
2
 
9,589

 
45
%
 
AA
 
1,829

 
8
%
3
 
1,254

 
6
%
 
A
 
5,486

 
26
%
4
 
138

 
1
%
 
BBB
 
10,110

 
47
%
5
 
43

 
—
%
 
BB
 
1,091

 
5
%
6
 
—

 
—
%
 
B and below
 
1,012

 
5
%
 
 
$
21,366

 
100
%
 
 
 
$
21,366

 
100
%


26
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation

 
 
March 31, 2018
 
 
Successor
 
 
(Unaudited)
Collateral Type
 
Amortized Cost
 
Fair Value
 
 
(Dollars in millions)
Total by collateral type
 
 
 
 
Government agency
 
$
119

 
$
118

Prime
 
194

 
194

Subprime
 
254

 
255

Alt-A
 
668

 
665

 
 
$
1,235

 
$
1,232

Total by NAIC designation
 
 
 
 
1
 
$
1,205

 
$
1,202

2
 
24

 
24

3
 
5

 
5

4
 
—

 
—

5
 
1

 
1

 
 
$
1,235

 
$
1,232




27
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Top 10 Holdings by Issuers

(Dollars in millions)
 
March 31, 2018
 
 
Successor
 
 
(Unaudited)
Issuer (a):
 
Fair Value
 
Percentage of Total Invested Assets
AT&T Inc.
 
$
127

 
0.5
%
JP Morgan Chase & Co.
 
125

 
0.5
%
Verizon Communications Inc.
 
124

 
0.5
%
United Mexican States
 
120

 
0.5
%
HSBC Holdings
 
120

 
0.5
%
Wells Fargo & Company
 
119

 
0.5
%
General Mortors Co
 
119

 
0.5
%
Goldman Sachs Group, Inc.
 
118

 
0.5
%
Metropolitan Transportation Authority (NY)
 
118

 
0.5
%
Metlife, Inc.
 
115

 
0.5
%
(a) Issuers excluding U.S. Governmental securities.

28
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Reinsurance Counterparty Risk Top 5 Reinsurers


 
 
 
 
(Unaudited)
(Dollars in millions)
 
 
 
Financial Strength Rating
Parent Company/Principal Reinsurers
 
Reinsurance Recoverable (a)
 
AM Best
 
S&P
 
Moody's
Wilton Reinsurance
 
$
1,572

 
 A+
 
 Not Rated
 
Not Rated
Scottish Re
 
183

 
Not Rated
 
Not Rated
 
Not Rated
Security Life of Denver
 
168

 
A
 
A
 
A2
London Life
 
112

 
 A
 
 Not Rated
 
Not Rated
Swiss Re Life and Health
 
105

 
A+
 
AA-
 
Aa3
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.



29
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Shareholder Information

Corporate Offices:
FGL Holdings
Boundary Hall, Cricket Square, 4th Floor
Grand Cayman KY1-1102
Cayman Islands


Investor Contact:
Diana Hickert-Hill
Investors@fglife.com
(410) 487-8898



Common stock and Dividend Information:
NYSE symbol: "FG"

 
 
High
 
Low
 
Close
 
Dividend Declared
2018 (Successor unaudited)
 
 
 
 
 
 
 
 
First Quarter
 
$
10.74

 
$
8.65

 
$
10.15

 
$
—


Transfer Agent
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Phone: (212) 509-4000
http://www.continentalstock.com


30
FGL HOLDINGS
Financial Supplement - March 31, 2018
(unaudited)

Research Analyst Coverage

Andrew Kligerman
Credit Suisse
(212) 325-5069
andrew.kligerman@credit-suisse.com

Jimmy Bhullar
J.P. Morgan
(212) 622-6397
jimmy.s.bhullar@jpmorgan.com

John Barnidge
Sandler O'Neill + Partners
(312) 281-3412
jbarnidge@sandleroneill.com
John Nadel
UBS Research
(212) 713-4299
john.nadel@ubs.com





31