Cayman Islands | 001-37779 | 98-1354810 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
Sterling House 16 Wesley Street Hamilton HM CX, Bermuda | ||||
(Address of principal executive offices) | (Zip Code) |
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)) |
Item 2.02. | Results of Operations and Financial Condition. |
• | Under the “Consolidated Financial Highlights” table, items titled “Total equity,” “Total equity excluding Accumulated Other Comprehensive Income (AOCI),” “GAAP Book value per common share,” “GAAP Book value per common share excluding AOCI” and “Debt to total Capitalization excluding AOCI”; |
• | Under the “Condensed Consolidated Balance Sheets” table, items titled “Reinsurance recoverable,” “Intangibles, net,” “Deferred tax assets, net,” “Goodwill,” “Other assets,” “Other liabilities,” “Total liabilities,” “Additional paid-in capital” and “Total shareholders’ equity”; and |
• | Under the “Capitalization/Book Value per Share” table, items titled “Total debt,” “Total shareholders’ equity,” “Total capitalization,” “Total capitalization excluding AOCI,” “Common shareholders’ equity,” “Total common shareholders’ equity excluding AOCI,” “GAAP Book value per common share including AOCI,” “GAAP Book value per common share excluding AOCI” and “Long-term debt/Total capitalization excluding AOCI.” |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.2 |
FIDELITY & GUARANTY LIFE | |||
/s/ Eric L. Marhoun | |||
Eric L. Marhoun | |||
General Counsel and Secretary | |||
Page | |
Consolidated Financial Highlights | |
Condensed Consolidated Balance Sheets | |
Quarterly Summary - Most Recent 5 Quarters | |
Non-GAAP Definitions | |
Summary of Adjustments to Arrive at AOI | |
Notable items Included in Net Income and AOI | |
Capitalization/Book Value per Share | |
Net Investment Spread Results | |
Sales Results by Product | |
B. Product Summary | |
C. Investment Summary | |
D. Counterparty Risk | |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Premiums | $ | 3 | $ | 7 | $ | 16 | $ | 12 | $ | 3 | $ | 11 | ||||||||||||
Net investment income | 92 | 174 | 261 | 257 | 247 | 240 | ||||||||||||||||||
Net investment gains (losses) | 42 | 146 | 117 | 67 | 81 | 51 | ||||||||||||||||||
Insurance and investment product fees and other | 28 | 35 | 41 | 44 | 44 | 38 | ||||||||||||||||||
Total revenues | 165 | 362 | 435 | 380 | 375 | 340 | ||||||||||||||||||
Net income (loss) | $ | (102 | ) | $ | 28 | $ | 61 | $ | 32 | $ | 22 | $ | 108 | |||||||||||
Adjusted Operating Income ("AOI") (1) | $ | 3 | $ | 36 | $ | 63 | $ | 37 | $ | 36 | $ | 41 | ||||||||||||
Dividends on preferred stock | (2 | ) | — | — | — | — | — | |||||||||||||||||
AOI available to common shareholders | 1 | 36 | 63 | 37 | 36 | 41 | ||||||||||||||||||
Per Unrestricted Common Shares Amounts: | ||||||||||||||||||||||||
Basic: | ||||||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (0.49 | ) | $ | 0.48 | $ | 1.06 | $ | 0.54 | $ | 0.38 | $ | 1.85 | |||||||||||
AOI available to common shareholders (1) | $ | — | $ | 0.62 | $ | 1.08 | $ | 0.63 | $ | 0.62 | $ | 0.70 | ||||||||||||
Diluted: | ||||||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (0.49 | ) | $ | 0.47 | $ | 1.06 | $ | 0.54 | $ | 0.38 | $ | 1.85 | |||||||||||
AOI available to common shareholders (1) | $ | — | $ | 0.62 | $ | 1.08 | $ | 0.63 | $ | 0.62 | $ | 0.70 | ||||||||||||
Dividends Paid to Common Shareholders Per Share | $ | — | $ | 0.065 | $ | 0.065 | $ | 0.065 | $ | 0.065 | $ | 0.065 | ||||||||||||
At Period End | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,215 | $ | 924 | $ | 885 | $ | 799 | $ | 887 | $ | 632 | ||||||||||||
Total investments | $ | 23,604 | $ | 23,326 | $ | 23,072 | $ | 22,627 | $ | 21,813 | $ | 21,076 | ||||||||||||
Total assets | $ | 29,929 | $ | 29,227 | $ | 28,965 | $ | 28,402 | $ | 27,897 | $ | 26,952 | ||||||||||||
Contractholder funds | $ | 21,844 | $ | 21,083 | $ | 20,792 | $ | 20,342 | $ | 20,052 | $ | 19,486 | ||||||||||||
Future policy benefits | $ | 4,751 | $ | 3,401 | $ | 3,412 | $ | 3,423 | $ | 3,435 | $ | 3,453 | ||||||||||||
Debt (including revolving credit facility) | $ | 412 | $ | 405 | $ | 405 | $ | 405 | $ | 405 | $ | 400 | ||||||||||||
Total equity | $ | 1,952 | $ | 2,284 | $ | 2,247 | $ | 2,113 | $ | 1,908 | $ | 1,752 | ||||||||||||
Total equity excluding Accumulated Other Comprehensive Income (AOCI) | $ | 1,877 | $ | 1,729 | $ | 1,704 | $ | 1,646 | $ | 1,617 | $ | 1,599 | ||||||||||||
Common shares issued and outstanding | 214.37 | 59.00 | 58.93 | 58.99 | 58.99 | 58.98 | ||||||||||||||||||
GAAP Book value per common share (1) | $ | 7.35 | $ | 38.71 | $ | 38.13 | $ | 35.82 | $ | 32.34 | $ | 29.70 | ||||||||||||
GAAP Book value per common share excluding AOCI (1) | $ | 7.00 | $ | 29.31 | $ | 28.92 | $ | 27.90 | $ | 27.41 | $ | 27.11 | ||||||||||||
Debt to total Capitalization excluding AOCI (1) | 18.0 | % | 19.0 | % | 19.2 | % | 19.7 | % | 20.0 | % | 20.0 | % | ||||||||||||
Return on average common shareholders' equity excluding AOCI (1) | N/M | 6.5 | % | 14.6 | % | 7.8 | % | 5.5 | % | 27.9 | % | |||||||||||||
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
Statutory Book value per share | $ | 4.26 | $ | 25.91 | $ | 25.91 | $ | 25.18 | $ | 26.06 | $ | 22.43 | ||||||||||||
Statutory Book value per share excluding IMR and AVR | $ | 6.92 | $ | 34.99 | $ | 34.99 | $ | 34.30 | $ | 35.28 | $ | 32.18 |
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity securities, available-for-sale, at fair value (amortized cost: December 31, 2017 - $21,475; September 30, 2017 - $20,063; September 30, 2016 - $18,521) | $ | 21,590 | $ | 21,154 | $ | 20,766 | $ | 20,052 | $ | 19,437 | ||||||||||
Equity securities, available-for-sale, at fair value (amortized cost: December 31, 2017 - $764; September 30, 2017 - $733; September 30, 2016 - $640) | 761 | 773 | 774 | 712 | 696 | |||||||||||||||
Derivative investments | 492 | 413 | 361 | 351 | 314 | |||||||||||||||
Short term investments | 25 | — | — | — | — | |||||||||||||||
Commercial mortgage loans | 548 | 547 | 550 | 579 | 582 | |||||||||||||||
Other invested assets | 188 | 185 | 176 | 119 | 47 | |||||||||||||||
Total investments | 23,604 | 23,072 | 22,627 | 21,813 | 21,076 | |||||||||||||||
Related party loans | — | 71 | 71 | 71 | 71 | |||||||||||||||
Cash and cash equivalents | 1,215 | 885 | 799 | 887 | 632 | |||||||||||||||
Accrued investment income | 211 | 231 | 204 | 225 | 201 | |||||||||||||||
Funds withheld for reinsurance receivables at fair value | 756 | — | — | — | — | |||||||||||||||
Reinsurance recoverable | 2,494 | 3,375 | 3,390 | 3,426 | 3,444 | |||||||||||||||
Intangibles, net | 856 | 1,129 | 1,097 | 1,184 | 1,228 | |||||||||||||||
Deferred tax assets, net | 176 | — | — | 87 | 68 | |||||||||||||||
Goodwill | 476 | — | — | — | — | |||||||||||||||
Other assets | 141 | 202 | 214 | 204 | 232 | |||||||||||||||
Total assets | $ | 29,929 | $ | 28,965 | $ | 28,402 | $ | 27,897 | $ | 26,952 | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
Contractholder funds | $ | 21,844 | $ | 20,792 | $ | 20,342 | $ | 20,052 | $ | 19,486 | ||||||||||
Future policy benefits, including $728 at fair value at December 31, 2017 | 4,751 | 3,412 | 3,423 | 3,435 | 3,453 | |||||||||||||||
Funds withheld for reinsurance liabilities | 2 | 1,083 | 1,106 | 1,134 | 1,142 | |||||||||||||||
Liability for policy and contract claims | 78 | 67 | 57 | 60 | 53 | |||||||||||||||
Debt | 307 | 300 | 300 | 300 | 300 | |||||||||||||||
Revolving credit facility | 105 | 105 | 105 | 105 | 100 | |||||||||||||||
Deferred tax liability, net | — | 62 | 11 | — | — | |||||||||||||||
Other liabilities | 890 | 897 | 945 | 903 | 666 | |||||||||||||||
Total liabilities | 27,977 | 26,718 | 26,289 | 25,989 | 25,200 | |||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | ||||||||||||||||
Shareholders' equity: | ||||||||||||||||||||
Preferred stock ($.0001 par value, 100,000,000 shares authorized, 375,000 shares issued and outstanding at December 31, 2017; $.01 par value, 50,000,000 shares authorized, no shares issued at September 30, 2017 and September 30, 2016, respectively) | — | — | — | — | — | |||||||||||||||
Common stock ($.0001 par value, 800,000,000 shares authorized, 214,370,000 issued and outstanding at December 31, 2017; $.01 par value, 500,000,000 shares authorized, 58,933,415 and 58,956,127 issued and outstanding at September 30, 2017 and September 30, 2016, respectively) | — | 1 | 1 | 1 | 1 | |||||||||||||||
Additional paid-in capital | 2,037 | 716 | 716 | 715 | 715 | |||||||||||||||
Retained earnings (Accumulated deficit) | (160 | ) | 1,000 | 942 | 914 | 896 | ||||||||||||||
Accumulated other comprehensive income | 75 | 543 | 467 | 291 | 153 | |||||||||||||||
Treasury stock, at cost (no shares at December 31, 2017; 568,847 shares at September 30, 2017; 537,613 shares at September 30, 2016) | — | (13 | ) | (13 | ) | (13 | ) | (13 | ) | |||||||||||
Total shareholders' equity | 1,952 | 2,247 | 2,113 | 1,908 | 1,752 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 29,929 | $ | 28,965 | $ | 28,402 | $ | 27,897 | $ | 26,952 | ||||||||||
Equity attributable to preferred shareholders (1) | $ | 377 | $ | — | $ | — | $ | — | $ | — |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Traditional life insurance premiums | $ | 3 | $ | 6 | $ | 10 | $ | 7 | $ | — | $ | 10 | ||||||||||||
Life contingent immediate annuity | — | 1 | 6 | 5 | 3 | 1 | ||||||||||||||||||
Net investment income | 92 | 174 | 261 | 257 | 247 | 240 | ||||||||||||||||||
Net investment gains (losses) | 42 | 146 | 117 | 67 | 81 | 51 | ||||||||||||||||||
Surrender charges | 3 | 10 | 9 | 9 | 9 | 7 | ||||||||||||||||||
Cost of insurance fees and other income | 25 | 25 | 32 | 35 | 35 | 31 | ||||||||||||||||||
Total revenues | 165 | 362 | 435 | 380 | 375 | 340 | ||||||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Traditional life insurance policy benefits and change in future policy benefits | 7 | 12 | 18 | 21 | 11 | 22 | ||||||||||||||||||
Life contingent immediate annuity benefits and changes in future policy benefits | 11 | 13 | 26 | 20 | 18 | 18 | ||||||||||||||||||
Interest sensitive and index product benefits and changes in future policy benefits | 123 | 202 | 276 | 194 | 239 | (20 | ) | |||||||||||||||||
General expenses | 11 | 47 | 30 | 35 | 30 | 25 | ||||||||||||||||||
Acquisition expenses | 27 | 44 | 65 | 72 | 81 | 92 | ||||||||||||||||||
Deferred acquisition costs ("DAC") | (22 | ) | (40 | ) | (59 | ) | (67 | ) | (78 | ) | (89 | ) | ||||||||||||
Amortization of intangibles | 1 | 36 | (14 | ) | 51 | 33 | 123 | |||||||||||||||||
Total benefits and expenses | 158 | 314 | 342 | 326 | 334 | 171 | ||||||||||||||||||
Operating income | 7 | 48 | 93 | 54 | 41 | 169 | ||||||||||||||||||
Interest expense | (2 | ) | (4 | ) | (6 | ) | (6 | ) | (6 | ) | (6 | ) | ||||||||||||
Income before income taxes | 5 | 44 | 87 | 48 | 35 | 163 | ||||||||||||||||||
Income tax expense | (107 | ) | (16 | ) | (26 | ) | (16 | ) | (13 | ) | (55 | ) | ||||||||||||
Net (loss) income | $ | (102 | ) | $ | 28 | $ | 61 | $ | 32 | $ | 22 | $ | 108 | |||||||||||
Less Preferred stock dividend | 2 | — | — | — | — | — | ||||||||||||||||||
Net (loss) income available to common shareholders | (104 | ) | 28 | 61 | 32 | 22 | 108 | |||||||||||||||||
Net (loss) income available to common shareholders per common share: | ||||||||||||||||||||||||
Basic | $ | (0.49 | ) | $ | 0.48 | $ | 1.06 | $ | 0.54 | $ | 0.38 | $ | 1.85 | |||||||||||
Diluted | $ | (0.49 | ) | $ | 0.47 | $ | 1.06 | $ | 0.54 | $ | 0.38 | $ | 1.85 | |||||||||||
Weighted average common shares used in computing net income per common share: | ||||||||||||||||||||||||
Basic | 214.37 | $ | 58.34 | 58.34 | 58.34 | 58.33 | 58.28 | |||||||||||||||||
Diluted | 214.37 | $ | 58.49 | 58.48 | 58.44 | 58.38 | 58.37 |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
(Dollars in millions, except per share data) | ||||||||||||||||||||||||
Net (loss) income | $ | (102 | ) | $ | 28 | $ | 61 | $ | 32 | $ | 22 | $ | 108 | |||||||||||
Adjustments to arrive at AOI: | ||||||||||||||||||||||||
Effect of investment (gains) losses, net of offsets (a) | — | (6 | ) | (5 | ) | 4 | 15 | (1 | ) | |||||||||||||||
Effect of change in FIA embedded derivative discount rate, net of offsets (a) | 6 | (10 | ) | 3 | (4 | ) | (2 | ) | (92 | ) | ||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets (a) | — | (1 | ) | 5 | 8 | 8 | (10 | ) | ||||||||||||||||
Effect of integration, merger related & other non-operating items (b) | (8 | ) | 29 | — | — | — | — | |||||||||||||||||
Net impact of Tax Cuts and Jobs Act | 131 | — | — | — | — | — | ||||||||||||||||||
Effects of tax impact of affiliated reinsurance embedded derivative | (20 | ) | — | — | — | — | — | |||||||||||||||||
Tax impact of adjusting items | (4 | ) | (4 | ) | (1 | ) | (3 | ) | (7 | ) | 36 | |||||||||||||
AOI | $ | 3 | $ | 36 | $ | 63 | $ | 37 | $ | 36 | $ | 41 | ||||||||||||
Dividends on preferred stock | (2 | ) | — | — | — | — | — | |||||||||||||||||
AOI available to common shareholders (1) | $ | 1 | $ | 36 | $ | 63 | $ | 37 | $ | 36 | $ | 41 | ||||||||||||
Per diluted common share: | ||||||||||||||||||||||||
Net (loss) income available to common shareholders | $ | (0.49 | ) | $ | 0.47 | $ | 1.06 | $ | 0.54 | $ | 0.38 | $ | 1.85 | |||||||||||
Adjustments to arrive at AOI: | ||||||||||||||||||||||||
Effect of investment (gains) losses, net of offsets (a) | — | (0.10 | ) | (0.09 | ) | 0.07 | 0.26 | (0.02 | ) | |||||||||||||||
Effect of change in FIA embedded derivative discount rate, net of offsets (a) | 0.03 | (0.17 | ) | 0.05 | (0.07 | ) | (0.04 | ) | (1.58 | ) | ||||||||||||||
Effect of change in fair value of reinsurance related embedded derivative, net of offsets (a) | — | (0.02 | ) | 0.09 | 0.14 | 0.14 | (0.17 | ) | ||||||||||||||||
Effect of integration, merger related & other non-operating items (b) | (0.04 | ) | 0.50 | — | — | — | — | |||||||||||||||||
Net impact of Tax Cuts and Jobs Act | 0.61 | — | — | — | — | — | ||||||||||||||||||
Effects of tax impact of affiliated reinsurance embedded derivative | (0.09 | ) | — | — | — | — | — | |||||||||||||||||
Tax impact of adjusting items | (0.02 | ) | (0.06 | ) | (0.02 | ) | (0.05 | ) | (0.12 | ) | 0.62 | |||||||||||||
AOI available to common shareholders per diluted share | $ | — | $ | 0.62 | $ | 1.09 | $ | 0.63 | $ | 0.62 | $ | 0.70 |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | 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) | — | (8 | ) | 1 | 15 | 28 | (12 | ) | ||||||||||||||||
Increase (decrease) in total revenues | (12 | ) | (8 | ) | 1 | 15 | 28 | (12 | ) | |||||||||||||||
Benefits and expenses: | ||||||||||||||||||||||||
Benefits and other changes in policy reserves (c) | 7 | (19 | ) | 12 | (10 | ) | (1 | ) | (168 | ) | ||||||||||||||
Acquisition and operating expenses, net of deferrals | 4 | 29 | — | — | — | — | ||||||||||||||||||
Amortization of intangibles (d) | (1 | ) | 10 | (10 | ) | 3 | (6 | ) | 77 | |||||||||||||||
(Decrease) increase in total benefits and expenses | 10 | 20 | 2 | (7 | ) | (7 | ) | (91 | ) | |||||||||||||||
Increase (decrease) in pre-tax operating income | (2 | ) | 12 | 3 | 8 | 21 | (103 | ) | ||||||||||||||||
(Decrease) increase in income tax expense (benefit) (e) | 107 | (4 | ) | (1 | ) | (3 | ) | (7 | ) | 36 | ||||||||||||||
Increase (decrease) in net income | $ | 105 | $ | 8 | $ | 2 | $ | 5 | $ | 14 | $ | (67 | ) |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Net income | $ | (102 | ) | $ | 28 | $ | 61 | $ | 32 | $ | 22 | $ | 108 | |||||||||||
AOI | $ | 3 | $ | 36 | $ | 63 | $ | 37 | $ | 36 | $ | 41 | ||||||||||||
Notable Items (Not Trendable) Included within AOI [(unfavorable)/favorable] | ||||||||||||||||||||||||
Legacy incentive compensation (a) | — | — | — | (1 | ) | (1 | ) | — | ||||||||||||||||
Project expenses (b) | — | — | (2 | ) | (5 | ) | (2 | ) | — | |||||||||||||||
Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (c) | (2 | ) | 1 | (2 | ) | 2 | 3 | 2 | ||||||||||||||||
Assumption review & DAC unlocking (d) | (9 | ) | 4 | 21 | — | (3 | ) | — | ||||||||||||||||
Other, including bond prepayment income & tax valuation allowance (e) | — | — | 2 | — | — | 2 |
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
(Dollars in millions, except per share data) | |||||||||||||||||||||
Capitalization: | |||||||||||||||||||||
Debt | $ | 412 | $ | 405 | $ | 405 | $ | 405 | $ | 400 | |||||||||||
Total debt | 412 | 405 | 405 | 405 | 400 | ||||||||||||||||
Total shareholders' equity | 1,952 | 2,247 | 2,113 | 1,908 | 1,752 | ||||||||||||||||
Total capitalization | 2,364 | 2,652 | 2,518 | 2,313 | 2,152 | ||||||||||||||||
AOCI | 75 | 543 | 467 | 291 | 153 | ||||||||||||||||
Total capitalization excluding AOCI (1) | $ | 2,289 | $ | 2,109 | $ | 2,051 | $ | 2,022 | $ | 1,999 | |||||||||||
Total shareholders' equity | 1,952 | 2,247 | 2,113 | 1,908 | 1,752 | ||||||||||||||||
Equity available to preferred shareholders | 377 | — | — | — | — | ||||||||||||||||
Common shareholders' equity | 1,575 | 2,247 | 2,113 | 1,908 | 1,752 | ||||||||||||||||
AOCI | 75 | 543 | 467 | 291 | 153 | ||||||||||||||||
Total common shareholders' equity excluding AOCI (1) | $ | 1,500 | $ | 1,704 | $ | 1,646 | $ | 1,617 | $ | 1,599 | |||||||||||
Common shares outstanding | 214.37 | 58.93 | 58.99 | 58.99 | 58.98 | ||||||||||||||||
Book Value per Share: (1) | |||||||||||||||||||||
GAAP Book value per common share including AOCI (1) | $ | 7.35 | $ | 38.13 | $ | 35.82 | $ | 32.34 | $ | 29.70 | |||||||||||
GAAP Book value per common share excluding AOCI (1) | $ | 7.00 | $ | 28.92 | $ | 27.90 | $ | 27.41 | $ | 27.11 | |||||||||||
Twelve months ended | |||||||||||||||||||||
Twelve Month Rolling Average Return on Equity ("ROE") | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
Return on Common Shareholders' Equity (1) | |||||||||||||||||||||
Return on average common shareholders' equity | N/M | 11.2 | % | 10.1 | % | 9.6 | % | 9.4 | % | ||||||||||||
Return on average common shareholders' equity, excluding AOCI (1) | N/M | 13.8 | % | 12.3 | % | 11.1 | % | 10.5 | % | ||||||||||||
Return on Common Shareholders' Equity - AOI (1) | |||||||||||||||||||||
Adjusted Operating return on common shareholders' equity, excluding AOCI (1) | 0.9 | % | 11.0 | % | 9.8 | % | 10.8 | % | 11.5 | % | |||||||||||
Three months ended | |||||||||||||||||||||
Quarterly Average ROE | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
Return on average common shareholders' equity | N/M | 11.2 | % | 6.4 | % | 4.8 | % | 23.4 | % | ||||||||||||
Return on average common shareholders' equity, excluding AOCI (1) | N/M | 14.6 | % | 7.8 | % | 5.5 | % | 27.9 | % | ||||||||||||
Adjusted Operating return on common shareholders' equity, excluding AOCI (1) | 0.9 | % | 15.0 | % | 9.1 | % | 9.0 | % | 10.6 | % | |||||||||||
Three months ended | |||||||||||||||||||||
Debt-to-Capital Ratios: (1) | December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
Long-term debt/Total capitalization excluding AOCI (1) | 18.0 | % | 19.2 | % | 19.7 | % | 20.0 | % | 20.0 | % |
A.M. Best | Fitch | Moody's | S&P | |||||
Company | ||||||||
FGL Holdings | ||||||||
Issuer Credit / Default Rating | Not Rated | BB+ | Ba3 | B++ | ||||
Outlook | Stable | Stable | Positive | |||||
CF Bermuda Holdings Limited | ||||||||
Issuer Credit / Default Rating | Not Rated | BB+ | Ba2 | BB+ | ||||
Outlook | Stable | Stable | Positive | |||||
F&G Re Ltd | ||||||||
Issuer Credit / Default Rating | Not Rated | BBB | Baa2 | BBB+ | ||||
Outlook | Stable | Stable | Stable | |||||
Fidelity &Guaranty Life Holdings, Inc. | ||||||||
Issuer Credit / Default Rating | bb+ | BB+ | Not Rated | BB+ | ||||
Outlook | Under Review With Developing Implications | Stable | Not Rated | Positive | ||||
Senior Unsecured Notes | bb+ | BB | Ba2 | BB+ | ||||
Outlook | Under Review With Developing Implications | Stable | Stable | |||||
Fidelity & Guaranty Life Insurance Company | ||||||||
Financial Strength Rating | B++ | BBB | Ba2 | BBB+ | ||||
Outlook | Under Review With Developing Implications | Stable | Stable | Stable | ||||
Fidelity & Guaranty Life Insurance Company of New York | ||||||||
Financial Strength Rating | B++ | BBB | Not Rated | BBB+ | ||||
Outlook | Under Review With Developing Implications | Stable | Not Rated | Stable | ||||
*Reflects current ratings and outlooks as of date of filing |
(Dollars in millions) | One Month Ended | Two Months Ended | Three Months Ended | |||||||||
December 31, 2017 | November 30, 2017 | December 31, 2016 | ||||||||||
Successor | Predecessor | Predecessor | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
Yield on average assets under management "AAUM" (1) | 4.48 | % | 4.93 | % | 4.85 | % | ||||||
Less: Interest credited and option cost | (2.47 | )% | (2.49 | )% | (2.56 | )% | ||||||
Total net investment spread - All product lines (1) | 2.01 | % | 2.44 | % | 2.29 | % | ||||||
FIA net investment spread | 2.67 | % | 3.05 | % | 3.00 | % | ||||||
Investment book yield - bonds purchased during the period (1) | 4.93 | % | 4.65 | % | 4.78 | % | ||||||
AAUM (1) | $ | 24,722 | $ | 21,167 | $ | 19,768 |
(Dollars in millions) | Three Months Ended | |||||||||||||||||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
Fixed index annuities ("FIA") | $ | 462 | $ | 424 | $ | 455 | $ | 438 | $ | 551 | ||||||||||
Fixed rate annuities ("MYGA") | 161 | 164 | 127 | 158 | 97 | |||||||||||||||
Institutional spread based (1) | — | — | — | 136 | — | |||||||||||||||
Total Annuity | $ | 623 | $ | 588 | $ | 582 | $ | 732 | $ | 648 | ||||||||||
Index universal life | 7 | 6 | 9 | 14 | 17 | |||||||||||||||
ULIC (FSR International) | 8 | — | — | — | — | |||||||||||||||
Total Sales | $ | 638 | $ | 594 | $ | 591 | $ | 746 | $ | 665 |
(Dollars in millions) | One month ended (b) | Two months ended | Three months ended | ||||||||||||||||||||||
December 31, 2017 | November 30, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | ||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||
Account balances at beginning of period: | $ | 17,892 | $ | 16,819 | $ | 16,430 | $ | 16,114 | $ | 15,603 | $ | 15,250 | |||||||||||||
Net deposits | 223 | 404 | 598 | 591 | 603 | 655 | |||||||||||||||||||
Premium and interest bonuses | 5 | 9 | 11 | 12 | 12 | 13 | |||||||||||||||||||
Fixed interest credited and index credits | 71 | 130 | 147 | 154 | 153 | 87 | |||||||||||||||||||
Guaranteed product rider fees | (8 | ) | (14 | ) | (17 | ) | (18 | ) | (18 | ) | (16 | ) | |||||||||||||
Surrenders, withdrawals, deaths, etc. | (142 | ) | (256 | ) | (350 | ) | (423 | ) | (239 | ) | (386 | ) | |||||||||||||
Account balance at end of period | $ | 18,041 | $ | 17,092 | $ | 16,819 | $ | 16,430 | $ | 16,114 | $ | 15,603 |
One Month Ended | Two Months Ended | Three Months Ended | ||||||||||
Product Type | December 31, 2017 | November 30, 2017 | December 31, 2016 | |||||||||
Successor | Predecessor | Predecessor | ||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
(Dollars in millions) | ||||||||||||
Fixed Index Annuities: | ||||||||||||
Index Strategies | $ | 146 | $ | 236 | $ | 437 | ||||||
Fixed Strategy | 32 | 52 | 119 | |||||||||
178 | 288 | 556 | ||||||||||
Fixed Rate Annuities: | ||||||||||||
Single-Year Rate Guaranteed | 1 | — | 2 | |||||||||
Multi-Year Rate Guaranteed | 44 | 116 | 97 | |||||||||
Total before coinsurance ceded | 223 | 404 | 655 | |||||||||
Coinsurance ceded | — | — | — | |||||||||
Net after coinsurance ceded | $ | 223 | $ | 404 | $ | 655 |
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 | % | $ | 14,152 | 78 | % | ||||||
Single-Year Rate Guaranteed | 10 | 1 | 1 | % | 634 | 4 | % | |||||||
Multi-Year Rate Guaranteed | 5 | 3 | 7 | % | 3,255 | 18 | % | |||||||
Total | $ | 18,041 | 100 | % |
Fixed Annuities Account Value | Fixed Index Annuities Account Value | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
SURRENDER CHARGE PERCENTAGES: | ||||||||
No surrender charge | $ | 774 | $ | 2,194 | ||||
0.0% < 2.0% | 31 | 344 | ||||||
2.0% < 4.0% | 28 | 321 | ||||||
4.0% < 6.0% | 586 | 715 | ||||||
6.0% < 8.0% | 673 | 1,885 | ||||||
8.0% < 10.0% | 1,763 | 2,547 | ||||||
10.0% or greater | 34 | 6,146 | ||||||
$ | 3,889 | $ | 14,152 |
Fixed and Fixed Index Annuities Account Value | Weighted Average Surrender Charge | ||||||
(Unaudited) | |||||||
(Dollars in millions) | |||||||
SURRENDER CHARGE EXPIRATION BY YEAR: | |||||||
Out of surrender charge | $ | 2,899 | — | % | |||
2018 | 1,250 | 4 | % | ||||
2019 - 2020 | 1,913 | 6 | % | ||||
2021 - 2022 | 3,127 | 8 | % | ||||
2023 - 2024 | 1,845 | 8 | % | ||||
Thereafter | 7,007 | 11 | % | ||||
$ | 18,041 | 7 | % |
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 | $ | 1,071 | $ | 1,431 | ||||
0.0% - 1.0% | 399 | 1,287 | ||||||
1.0% - 2.0% | 324 | 56 | ||||||
2.0% - 3.0% | 2,073 | 13 | ||||||
3.0% - 4.0% | 22 | — | ||||||
Allocated to index strategies | — | 11,365 | ||||||
$ | 3,889 | $ | 14,152 |
Minimum Guaranteed Cap | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
1% | 2% | 3% | 5% | 6% | ||||||||||||||||
Current Cap | (Dollars in millions) | |||||||||||||||||||
At minimum | $ | — | $ | — | $ | 1,634 | $ | 665 | $ | — | ||||||||||
2-3% | 739 | — | — | — | — | |||||||||||||||
3-4% | 1,099 | — | 399 | — | — | |||||||||||||||
4-5% | 432 | — | 396 | — | — | |||||||||||||||
5-6% | 79 | 2 | 110 | 5 | — | |||||||||||||||
6-7% | 37 | 2 | 21 | — | 7 | |||||||||||||||
7% + | 70 | 38 | 191 | — | 73 | |||||||||||||||
Total: | $ | 2,456 | $ | 42 | $ | 2,751 | $ | 670 | $ | 80 |
Minimum Guaranteed Cap 1% | ||||
(Unaudited) | ||||
Current Cap | (Dollars in millions) | |||
At minimum | $ | 1,605 | ||
1% to 2% | 2,513 | |||
2% to 3% | 666 | |||
3% + | 110 | |||
Total: | $ | 4,894 |
Minimum Guaranteed Cap 2% | Minimum Guaranteed Cap 5% | |||||||
(Unaudited) | ||||||||
Current Cap | (Dollars in millions) | |||||||
At minimum | — | $ | 21 | |||||
2% to 5% | 2 | — | ||||||
5% to 7% | 10 | 53 | ||||||
7% to 9% | — | 44 | ||||||
9% to 11% | — | 19 | ||||||
11% to 13% | — | 9 | ||||||
Total: | $ | 12 | $ | 146 |
(Dollars in millions) | December 31, 2017 | September 30, 2017 | |||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||||
(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 | $ | 84 | $ | 84 | 1 | % | $ | 105 | $ | 107 | — | % | |||||||||||
United States Government sponsored entities | 123 | 122 | 1 | % | 127 | 128 | 1 | % | |||||||||||||||
United States municipalities, states and territories | 1,736 | 1,747 | 7 | % | 1,573 | 1,726 | 8 | % | |||||||||||||||
Corporate securities: | |||||||||||||||||||||||
Finance, insurance and real estate | 5,898 | 5,930 | 25 | % | 5,400 | 5,806 | 25 | % | |||||||||||||||
Manufacturing, construction and mining | 988 | 996 | 4 | % | 980 | 1,018 | 4 | % | |||||||||||||||
Utilities, energy and related sectors | 2,260 | 2,278 | 10 | % | 2,109 | 2,202 | 10 | % | |||||||||||||||
Wholesale/retail trade | 1,448 | 1,457 | 6 | % | 1,342 | 1,408 | 6 | % | |||||||||||||||
Services, media and other | 2,320 | 2,354 | 10 | % | 2,196 | 2,296 | 10 | % | |||||||||||||||
Hybrid securities | 1,445 | 1,446 | 6 | % | 1,388 | 1,465 | 6 | % | |||||||||||||||
Non-agency residential mortgage-backed securities | 1,156 | 1,155 | 5 | % | 1,031 | 1,150 | 5 | % | |||||||||||||||
Commercial mortgage-backed securities | 956 | 956 | 4 | % | 974 | 978 | 4 | % | |||||||||||||||
Asset-backed securities | 3,061 | 3,065 | 13 | % | 2,838 | 2,870 | 13 | % | |||||||||||||||
Equity securities | 764 | 761 | 3 | % | 733 | 773 | 3 | % | |||||||||||||||
Commercial mortgage loans | 548 | 549 | 2 | % | 547 | 552 | 2 | % | |||||||||||||||
Other (primarily derivatives) | 647 | 678 | 3 | % | 410 | 595 | 3 | % | |||||||||||||||
Short term investments | 25 | 25 | — | % | — | — | — | % | |||||||||||||||
Total | $ | 23,459 | $ | 23,603 | 100 | % | $ | 21,753 | $ | 23,074 | 100 | % |
NAIC Designation | Fair Value | Percent | Rating Agency Rating | Fair Value | Percent | |||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||
1 | $ | 11,217 | 52 | % | AAA | $ | 1,784 | 8 | % | |||||||
2 | 9,086 | 42 | % | AA | 2,036 | 9 | % | |||||||||
3 | 1,089 | 5 | % | A | 5,887 | 27 | % | |||||||||
4 | 136 | 1 | % | BBB | 9,810 | 46 | % | |||||||||
5 | 61 | — | % | BB | 994 | 5 | % | |||||||||
6 | 1 | — | % | B and below | 1,079 | 5 | % | |||||||||
$ | 21,590 | 100 | % | $ | 21,590 | 100 | % |
December 31, 2017 | ||||||||
Successor | ||||||||
(Unaudited) | ||||||||
Collateral Type | Amortized Cost | Fair Value | ||||||
(Dollars in millions) | ||||||||
Total by collateral type | ||||||||
Government agency | $ | 123 | $ | 122 | ||||
Prime | 199 | 199 | ||||||
Subprime | 267 | 267 | ||||||
Alt-A | 690 | 689 | ||||||
$ | 1,279 | $ | 1,277 | |||||
Total by NAIC designation | ||||||||
1 | $ | 1,249 | $ | 1,247 | ||||
2 | 18 | 18 | ||||||
3 | 7 | 7 | ||||||
4 | 1 | 1 | ||||||
5 | 4 | 4 | ||||||
$ | 1,279 | $ | 1,277 |
(Dollars in millions) | December 31, 2017 | ||||||
Successor | |||||||
(Unaudited) | |||||||
Issuer (a): | Fair Value | Percentage of Total Invested Assets | |||||
Wells Fargo & Company | $ | 155 | 0.7 | % | |||
Metropolitan Transportation Authority (NY) | 123 | 0.5 | % | ||||
JP Morgan Chase & Co. | 114 | 0.5 | % | ||||
General Electric Company | 104 | 0.4 | % | ||||
Nationwide Mutual Insurance Company | 103 | 0.4 | % | ||||
Goldman Sachs Group, Inc. | 98 | 0.4 | % | ||||
Entergy Corp | 94 | 0.4 | % | ||||
Bank of America Corp | 92 | 0.4 | % | ||||
Bank of New York Mellon Corp | 92 | 0.4 | % | ||||
Metlife, Inc. | 91 | 0.4 | % |
(Unaudited) | ||||||||||
(Dollars in millions) | Financial Strength Rating | |||||||||
Parent Company/Principal Reinsurers | Reinsurance Recoverable (a) | AM Best | S&P | Moody's | ||||||
Wilton Reinsurance | $ | 1,575 | A+ | Not Rated | Not Rated | |||||
Scottish Re | 179 | Not Rated | Not Rated | Not Rated | ||||||
Security Life of Denver | 167 | A | A | A2 | ||||||
London Life | 113 | A | Not Rated | Not Rated | ||||||
Swiss Re Life and Health | 104 | A+ | AA- | Aa3 |
High | Low | Close | Dividend Declared | |||||||||||||
2017 (Successor unaudited) | ||||||||||||||||
One Month Ended December 31, 2017 | $ | 10.10 | $ | 9.19 | $ | 10.02 | $ | — |
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