2Q 2016 Financial Supplement
Exhibit 99.2
Investor Supplement Second Fiscal Quarter 2016 (Fiscal Year Ended September 30) 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. The results of operations for interim periods should not be considered indicative of results to be expected for the full year. Non-GAAP Financial Measures This document contains non-GAAP financial measures to analyze the Company's operating performance for the periods presented. 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.
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement March 31, 2016 Page A.
Financial Highlights Consolidated Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quarterly Summary - Most Recent 5 Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 4 5 6
Reconciliation from Net Income (Loss) to AOI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-GAAP Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 7
Summary of Adjustments to Arrive at AOI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AOI Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalization/Book Value per Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Investment Spread Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales Results by Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 9 10 12 12
Product Summary Annuity Account Balance Rollforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annuity Deposits by Product Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Surrender Charge Protection and Account Values by Product Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annuity Liability Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 13 13 15
Investment Summary Summary of Invested Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit Quality of Fixed Maturity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Managed and Direct Related Party Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary of Residential Mortgage Backed Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 18 19 20
D. Counterparty Risk Top 10 Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reinsurance Recoverable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21 22
E.
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
F.
Research Analyst Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
B.
C.
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Consolidated Financial Highlights
March 31, 2016 Revenues: Premiums Net investment income Net investment gains (losses) Insurance and investment product fees and other Total revenues
December 31, 2015
Three Months Ended September 30, 2015 (Dollars in millions)
June 30, 2015
Six Months Ended March 31, March 31, 2016 2015
March 31, 2015
$
16 227 (42) 32 233
$
15 222 63 29 329
$
15 223 (112) 24 150
$
17 212 74 23 326
$
15 208 (58) 22 187
$ $
43 9
$ $
31 48
$ $
42 30
$ $
25 86
$ $
23 (12)
$
74 57
$
50 2
$ $
0.74 0.16
$ $
0.53 0.82
$ $
0.72 0.52
$ $
0.43 1.48
$ $
0.40 (0.21)
$ $
1.27 0.98
$ $
0.86 0.03
$ $
0.73 0.16
$ $
0.53 0.82
$ $
0.72 0.51
$ $
0.43 1.48
$ $
0.40 (0.21)
$ $
1.26 0.98
$ $
0.86 0.03
Dividends Paid to Shareholders Per Share
$
0.065
$
0.065
$
0.065
$
0.065
$
0.065
$
0.130
$
0.130
At Period End Cash and cash equivalents Total investments Total assets Contractholder funds Future policy benefits Notes payable Total equity Total equity excluding AOCI Common shares issued and outstanding
$ $ $ $ $ $ $ $
496 19,580 25,499 18,295 3,463 300 1,511 1,468 58.96
$ $ $ $ $ $ $ $
568 18,953 25,031 17,961 3,473 300 1,399 1,461 58.96
$ $ $ $ $ $ $ $
502 19,094 24,925 17,770 3,468 300 1,502 1,414 58.87
$ $ $ $ $ $ $ $
654 19,391 25,159 17,704 3,465 300 1,559 1,384 58.76
$ $ $ $ $ $ $ $
849 19,465 25,195 17,521 3,481 300 1,710 1,302 58.74
$ $ $ $ $ $ $ $
496 19,580 25,499 18,295 3,463 300 1,511 1,468 58.96
$ $ $ $ $ $ $ $
849 19,465 25,195 17,521 3,481 300 1,710 1,302 58.74
Adjusted Operating Income ("AOI") Net income (loss) Per Unrestricted Common Shares Amounts: Basic: AOI Net income (loss) Diluted: AOI Net income (loss)
GAAP Book value per share GAAP Book Value per Share excluding AOCI Debt to total Capitalization excluding AOCI Return on average shareholders' equity Statutory Book value per share(1) Statutory Book value per share excluding IMR and AVR(1)
$ $
$ $
25.63 24.90 17.0% 2.5% 21.28 31.43
$ $
$ $
23.73 24.78 17.0% 13.4% 21.13 31.55
$ $
$ $
25.51 24.02 17.5% 8.6% 20.79 31.40
$ $
$ $
26.53 23.55 17.8% 25.6% 21.02 31.70
$ $
$ $
$
29.11 $ 22.17 18.7 % (3.7)% 20.87 30.97
31 449 21 61 562
$
25.63 $ 24.90 17.0% 7.9% 21.28 31.43
26 416 1 42 485
29.11 22.17 18.7% 0.3% 20.87 30.97
(1) The statutory book value per share and the statutory book value per share excluding interest maintenance reserve ("IMR") and asset valuation reserve ("AVR") are estimates due to the timing of the filing of statutory statements and are prepared consistent with the presentation of the statutory financial statements in the combined annual statement.
3
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except per share data) March 31, 2016 ASSETS Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2016 - $18,069; September 30, 2015 $17,622) Equity securities, available-for-sale, at fair value (amortized cost: March 31, 2016 - $584; September 30, 2015 - $597)
$
18,057
December 31, 2015
September 30, 2015
$
$
17,428
17,746
June 30, 2015
$
March 31, 2015
17,965
$
18,055
620
637
620
583
606
Derivative investments
158
145
82
220
268
Commercial mortgage loans
613
616
491
405
304
Other invested assets
132
127
155
218
232
Total investments
19,580
18,953
19,094
19,391
19,465
Related party loans Cash and cash equivalents Accrued investment income
76
81
78
77
75
496
568
502
654
849
209
181
191
164
180
Reinsurance recoverable
3,512
3,552
3,579
3,642
3,691
Intangibles, net
1,170
1,162
988
808
610
228
286
228
200
104
Deferred tax assets Other assets Total assets
228
248
265
223
221
$
25,499
$
25,031
$
24,925
$
25,159
$
25,195
$
18,295
$
17,961
$
17,770
$
17,704
$
17,521
LIABILITIES AND SHAREHOLDERS' EQUITY Contractholder funds Future policy benefits
3,463
3,473
3,468
3,465
3,481
Funds withheld for reinsurance liabilities
1,210
1,251
1,267
1,325
1,329
51
64
55
60
60
Debt
300
300
300
300
300
Other liabilities
669
583
563
746
794
23,988
23,632
23,423
23,600
23,485
Liability for policy and contract claims
Total liabilities Shareholders' equity: Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued at March 31, 2016 and September 30, 2015)
$
Common stock ($.01 par value, 500,000,000 shares authorized, 58,964,396 issued and outstanding at March 31, 2016; 58,870,823 shares issued and outstanding at September 30, 2015)
—
$
—
$
—
$
—
$
—
1
1
1
1
1
Additional paid-in capital
720
718
714
711
710
Retained earnings
759
754
710
683
601
43
(62)
88
175
408
(12)
(12)
(11)
(11)
Accumulated other comprehensive income Treasury stock, at cost (537,613 shares at March 31, 2016; 512,391 shares at September 30, 2015)
1,511
Total shareholders' equity Total liabilities and shareholders' equity
$
25,499
$
(10)
1,399
$
1,502
$
1,559
$
1,710
25,031
$
24,925
$
25,159
$
25,195
4
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Quarterly Summary - Most Recent 5 Quarters Three Months Ended March 31, 2016 Revenues: Traditional life insurance premiums Life contingent immediate annuity Net investment income Net investment gains (losses) Surrender charges Cost of insurance fees and other income Total revenues Benefits and expenses: Traditional life insurance policy benefits and change in future policy benefits
$
11 $ 5 227 (42) 5 27 233
10 5 222 63 4 25 329
Six Months Ended
September 30, 2015 (Dollars in millions) $
June 30, 2015
11 $ 4 223 (112) 5 19 150
March 31, 2015
10 7 212 74 5 18 326
$
March 31, 2016
12 $ 3 208 (58) 5 17 187
21 10 449 21 10 51 562
March 31, 2015
$
22 4 416 1 9 33 485
16
18
18
20
17
34
36
21
32
30
29
26
53
36
151 25 75 (73) (3) 212 21 (6)
131 26 73 (71) 41 250 79 (6)
56 29 64 (63) (33) 101 49 (6)
$
15 6 9
$
73 25 48
$
43 13 30
$
29 22 72 (68) 88 192 134 (6) 128 42 86 $
$ $
0.16 0.16
$ $
0.82 0.82
$ $
0.52 0.51
$ $
1.48 1.48
Life contingent immediate annuity benefits and changes in future policy benefits Interest sensitive and index product benefits and changes in future policy benefits General expenses Acquisition expenses Deferred acquisition costs ("DAC") Amortization of intangibles Total benefits and expenses Operating income (loss) Interest expense Income (loss) before income taxes Income tax expense Net income (loss)
December 31, 2015
129 27 74 (73) (7) 193 (6) (6) (12) — (12) $
282 51 148 (144) 38 462 100 (12) 88 31 57 $
324 55 162 (160) 9 462 23 (12) 11 9 2
0.98 0.98
0.03 0.03
Net income (loss) per common share: Basic Diluted Weighted average common shares used in computing net income (loss) per common share: Basic Diluted
58.31 58.61
58.22 58.54
58.09 58.42
58.06 58.24
$ $
(0.21) $ (0.21) $
58.03 58.03
58.26 58.57
$ $
58.16 58.33
5
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Reconciliation from Net Income (Loss) to Adjusted Operating Income ("AOI ") All amounts are net of offsets related to value of business acquired ("VOBA") and deferred acquisition cost ("DAC") amortization and income taxes. Three Months Ended March 31, 2016
December 31, 2015
Six Months Ended
September 30, 2015
June 30, 2015
March 31, 2015
March 31, 2016
March 31, 2015
(Dollars in millions, except per share data)
Net income (loss) Adjustments to arrive at AOI:
$
Effect of investment (gains) losses, net of offsets Effect of change in FIA embedded derivative discount rate, net of offsets Effect of change in fair value of reinsurance related embedded derivative, net of offsets
Per diluted common share: Net income (loss) Adjustments to arrive at AOI:
48
$
30
$
86
(4) 29
3 (7)
8 23
(23) (21)
$
(12) $ 21 15
57
$
2
(1) 22
23 35
9
(13)
(19)
(17)
(1)
(4)
(9)
$
$
— 31
$
— 42
$
— 25
$
— 23
$
— 74
$
(1) 50
$
0.16
$
0.82
$
0.51
$
1.48
$
(0.21) $
0.98
$
(0.07) 0.49
Effect of investment (gains) losses, net of offsets Effect of change in FIA embedded derivative discount rate, net of offsets Effect of change in fair value of reinsurance related embedded derivative, net of offsets Effects of class action litigation reserves, net of offsets
AOI per diluted share
$
— 43
Effects of class action litigation reserves, net of offsets
AOI
9
$
0.15 — 0.73
0.05 (0.12)
$
(0.22) — 0.53 $
0.15 0.39 (0.33) — 0.72 $
(0.39) (0.37) (0.29) — 0.43 $
0.37 0.26 (0.02) — 0.40 $
(0.02) 0.38 (0.08) — 1.26 $
0.03 0.40 0.60 (0.15) (0.02) 0.86
6
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) NON-GAAP FINANCIAL MEASURES AOI AOI is a non-GAAP economic measure we use 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 our 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 reinsurance related embedded derivative, and (iv) the effect of class action litigation reserves. All adjustments to AOI are net of the corresponding VOBA, DAC and income tax impact (using an effective tax rate of 35%) related to these adjustments as appropriate. While these adjustments are an integral part of the overall performance of FGL, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective 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 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. 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.
7
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Summary of Adjustments to Arrive at AOI (Unaudited) Three Months Ended March 31, 2016
December 31, 2015
September 30, 2015
Six Months Ended June 30, 2015
March 31, 2015
March 31, 2016
March 31, 2015
(Dollars in millions)
Revenue: Net investment gains (a)
$
(21) $
(23) $
(81) $
49
(10) $
34
11
(21)
(23)
(81)
49
(10)
34
Benefits and other changes in policy reserves (b)
80
(19)
61
(64)
34
61
85
Acquisition and operating expenses, net of deferrals (c)
—
—
1
—
—
—
(1)
Increase (decrease) in total revenues
11
$
$
Benefits and expenses:
Amortization of intangibles
(39)
14
(21)
52
(29)
(25)
(45)
Increase (decrease) in total benefits and expenses
41
(5)
41
(12)
5
36
39
Increase (decrease) in pre-tax operating income
52
(26)
18
(93)
54
26
73
32
(19)
(9)
(25)
(Decrease) increase in income tax expense (benefit) Increase (decrease) in net income (loss)
(18) $
34
9 $
(17) $
(6) 12
$
(61) $
35
$
17
$
48
(a) Net investment gains: includes the effects of net investment gains and change in fair value of the reinsurance related embedded derivative. (b) Benefits and other changes in policy reserves: includes the effects of the change in fair value of the FIA embedded derivative discount rate. (c) Acquisition and operating expenses: includes the effects of the class action litigation reserve.
8
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) AOI Analysis (Unaudited)
Each quarterly reporting period, we identify notable items that explain the trends in our 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 or earnings calls to explain our AOI results. We believe that understanding these items provides further clarity to the financial performance of the business. Three Months Ended September 30, 2015
March 31, 2016
Six Months Ended June 30, 2015
December 31, 2015
March 31, 2015
March 31, 2016
March 31, 2015
$
$
(Dollars in millions)
AOI
$
43
$
31
$
42
$
25
$
23
74
50
Notable Items Included within AOI [(unfavorable)/favorable] Legacy incentive compensation (a)
—
(1)
(1)
(1)
(2)
(1)
(4)
Project expenses (b) Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (c) Assumption review & DAC unlocking (d)
(1)
(2)
(2)
(1)
(1)
(3)
(2)
5
(3)
(5)
(2)
—
2
3
4
2
14
—
—
6
—
2
1
2
—
—
3
—
Tax valuation allowance / other (e)
(a) 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. (b) Expenses associated with corporate development activities, including mergers & acquisitions. (c) The release of annuity reserves associated with mortality of annuitants which varies due to timing, volume and severity of experience. (d) Annually in the 4th fiscal quarter, we complete our Annual Assumption Review & DAC Unlocking process by adjusting our valuation assumptions to align with actual experience. Also includes unlocking in other quarters from updating our DAC amortization models for actual experience and equity market fluctuations. (e) Changes in the Company's deferred tax valuation allowance and other net favorable activity.
9
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Capitalization/Book Value per Share March 31, 2016
Capitalization: Debt Total debt Total shareholders' equity Total capitalization AOCI Total capitalization excluding AOCI (a) Total shareholders' equity AOCI Total shareholders' equity excluding AOCI (a)
$
$
300 300 1,511 1,811 43 1,768
$
1,511 43 1,468
Common shares outstanding Book Value per Share: (b) GAAP Book value per share including AOCI GAAP Book value per share excluding AOCI (a)
December 31, September 30, June 30, 2015 2015 2015 (Dollars in millions, except per share data)
$
$
300 300 1,399 1,699 (62) 1,761
$
1,399 (62) 1,461
58.96 $ $
25.63 24.90
$
$
300 300 1,502 1,802 88 1,714
$
1,502 88 1,414
58.96 $ $
23.73 24.78
$
$
300 300 1,559 1,859 175 1,684
$
1,559 175 1,384
58.87 $ $
25.51 24.02
March 31, 2015
$
$
300 300 1,710 2,010 408 1,602
$
1,710 408 1,302
58.76 $ $
26.53 23.55
58.74 $ $
29.11 22.17
Twelve months ended Twelve Month Rolling Average Return on Equity ("ROE") Return on Shareholders' Equity (c) Return on average shareholders' equity, excluding AOCI (c) Return on Shareholders' Equity - AOI (d) Adjusted Operating ROE, excluding AOCI (d)
March 31, 2016
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
12.3%
11.0%
8.8%
9.6%
7.6 %
10.0%
8.8%
9.0%
7.8%
8.8 %
Three months ended Quarterly Average ROE Return on average shareholders' equity, excluding AOCI (c) Adjusted Operating ROE, excluding AOCI (d) Debt-to-Capital Ratios: (e) Long-term debt/Total capitalization excluding AOCI
March 31, 2016
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
2.0% 11.7%
13.4% 8.6%
8.6% 12.0%
25.6% 7.4%
(3.7)% 7.0 %
17.0%
17.0%
17.5%
17.8%
18.7 % 10
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) (a) Total capitalization, total stockholders’ equity and book value per share excluding AOCI (a non-GAAP financial measure) are based on stockholders’ 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, we believe these non-GAAP financial measures provide useful supplemental information. (b) Book value per share including and excluding AOCI is calculated as total stockholders’ equity and total stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding. (c) Return on Equity, excluding AOCI is a non-GAAP measure. It is calculated by dividing net income by total average equity excluding AOCI. Average equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average equity is calculated using the beginning and ending equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. (d) Adjusted Operating ROE, excluding AOCI is a non-GAAP measure. It is calculated by dividing AOI by total average equity excluding AOCI. Average equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average equity is calculated using the beginning and ending equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. (e) Debt-to-capital ratios are computed using total capitalization excluding AOCI. Adjusted debt includes the total senior unsecured debentures.
Financial Strength Ratings S&P
A.M. Best
Moody's
Fitch
Fidelity and Guaranty Life Insurance Company
BBB-
Fidelity and Guaranty Life Insurance Company of New York
BBB-
B++
Baa3
BBB
B++
Not Rated
BBB
CreditWatch Developing
Under Review With Developing Implications
Positive
Ratings Watch Evolving
As of Date of Financial Supplement
Rating Agency Outlook
11
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Net Investment Spread Results Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 4.91 % 4.72 % 4.89 % 4.77 % (2.68)% (2.90)% (2.64)% (2.81)% 2.27 % 1.91 % 2.21 % 1.87 %
(Dollars in millions) Yield on average assets under management "AAUM" (at amortized cost) Less: Interest credited and option cost Total net investment spread - All product lines FIA net investment spread
2.93 %
2.91 %
2.94 %
2.90 %
Investment book yield - bonds purchased during the period (b)
6.10 %
4.73 %
5.75 %
4.95 %
AAUM (a)
$
18,465
$
17,616
$
18,349
$
17,434
(a) AAUM is a non-GAAP measure and is the sum of (i) total invested assets at amortized cost, excluding derivatives; and including (ii) related party loans and investments and (iii) cash and cash equivalents at the end of each month in the period divided by the number of months in the period. (b) Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. Sales Results by Product (Dollars in millions)
Fixed index annuities Fixed rate annuities Index universal life All other products Total Sales
March 31, 2016 $ 418 183 11 — $ 612
Three Months Ended December 31, September 30, June 30, 2015 2015 2015 $ 437 $ 424 $ 507 52 9 12 13 11 10 — 1 5 $ 502 $ 445 $ 534
Six Months Ended March 31, 2015 $ 600 10 7 7 $ 624
March 31, March 31, 2016 2015 855 1,248 235 265 24 14 — 15 $ 1,114 $ 1,542
12
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Annuity Account Balance Rollforward (a)
Three months ended
(Dollars in millions) March 31, 2016
Account balances at beginning of period: Net deposits Premium and interest bonuses Fixed interest credited and index credits Guaranteed product rider fees Surrenders, withdrawals, deaths, etc. Account balance at end of period
$
$
December 31, 2015
14,330 $ 608 11 41 (14) (377) 14,599 $
September 30, 2015
14,154 $ 507 12 66 (13) (396) 14,330 $
June 30, 2015
14,000 $ 435 9 75 (8) (357) 14,154 $
March 31, 2015
13,655 $ 525 9 117 (9) (296) 14,001 $
13,254 608 9 115 (9) (322) 13,655
(a) The rollforward reflects the account balance of our fixed index annuities and fixed rate annuities. Annuity Deposits by Product Type
Three Months Ended March 31, March 31, 2016 2015 (Dollars in millions)
Product Type Fixed Index Annuities: Index Strategies Fixed Strategy
Six Months Ended
$
329 91 420
$
March 31, 2016
521 77 598
$
703 170 873
March 31, 2015
$
1,092 156 1,248
Fixed Rate Annuities: Single-Year Rate Guaranteed Multi-Year Rate Guaranteed
2 187
8 4
3 240
20 240
Total before coinsurance ceded Coinsurance ceded Net after coinsurance ceded
609 1 608
610 2 608
1,116 1 1,115
1,508 73 1,435
$
$
$
$
13
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Surrender Charge Protection and Account Values by Product Type Annuity Surrender Charges and Account Values (net of reinsurance) at March 31, 2016: Surrender Charge
Product Type Fixed Index Annuities Single-Year Rate Guaranteed Multi-Year Rate Guaranteed Total
Avg. Years Avg. Years at Issue Remaining 11 6 10 1 5 3
Net Account Value
Avg. % Dollars in Remaining millions 8% $ 11,646 1% 642 7% 2,311 $ 14,599
% 80% 4% 16% 100%
14
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
Annuity Liability Characteristics Fixed Fixed Index Annuities Annuities Account Account Value Value (Dollars in millions) SURRENDER CHARGE PERCENTAGES: No surrender charge 0.0% < 2.0% 2.0% < 4.0% 4.0% < 6.0% 6.0% < 8.0% 8.0% < 10.0% 10.0% or greater
$
$
SURRENDER CHARGE EXPIRATION BY YEAR: Out of Surrender Charge 2016 2017 - 2018 2019 - 2020 2021 - 2022 Thereafter
615 38 84 314 1,221 630 51 2,953
Fixed and Fixed Index Annuities Account Value (Dollars in millions) $
$
2,198 626 2,598 1,818 1,715 5,644 14,599
$
$
1,614 172 697 635 1,081 2,492 4,955 11,646
Weighted Average Surrender Charge
—% 3% 6% 8% 9% 11% 7%
15
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Fixed Fixed Index Annuities Annuities Account Account Value Value (Dollars in millions) CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL: No differential 0.0% - 1.0% 1.0% - 2.0% 2.0% - 3.0% 3.0% - 4.0% 4.0% - 5.0% Allocated to index strategies
$
1,104 461 291 1,040 57 — — 2,953
$
$
1,010 1,162 78 14 — — 9,382 11,646
$
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES Monthly Average, Point to Point and Gain Trigger Strategies with Cap Minimum Guaranteed Cap 1%
2%
Current Cap At minimum 2-3% 3-4% 4-5% 5-6% 6-7% 7% + Total:
$
$
— 145 596 311 42 25 42 1,161
$
$
3% 5% (Dollars in millions) — — — — — 1 11 12
$
$
1,005 — 613 632 502 68 143 2,963
$
$
6% 807 — — — 20 8 — 835
$
$
— — — — — 3 65 68
16
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Monthly Point-to-Point with Cap Minimum Guaranteed Cap 1% (Dollars in millions)
Current Cap At minimum 1% to 2% 2% to 3% 3% + Total:
$
362 2,361 958 349 4,030
$
3 Year Step Forward with Cap
Current Cap At minimum 2% to 5% 5% to 7% 7% to 9% 9% to 11% 11% to 13% 13% + Total:
Minimum Minimum Guaranteed Cap 2% Guaranteed Cap 5% (Dollars in millions) $
$
— — 3 — — — — 3
$
$
17 — 51 47 20 11 — 146
There is an additional $164 million Account Value allocated to strategies not listed above. Of this $164 million, $16 million is at the guaranteed rates.
17
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
Summary of Invested Assets by Asset Class (Dollars in millions)
March 31, 2016 Carrying Value
Amortized Cost Fixed maturity securities, available-for-sale: United States Government full faith and credit United States Government sponsored entities United States municipalities, states and territories Corporate securities: Finance, insurance and real estate Manufacturing, construction and mining
$
Utilities, energy and related sectors
Wholesale/retail trade Services, media and other Hybrid securities Non-agency residential mortgage-backed securities Commercial mortgage-backed securities Asset-backed securities Equity securities Commercial mortgage loans Other (primarily derivatives and loan participations) Total
$
233 122 1,525 4,623 922 2,003 1,074 1,699 1,310 1,359 847 2,352 584 613 361 19,627
$
$
September 30, 2015 Percent
244 125 1,666
1% $ 1% 9%
4,824 847 1,940 1,097 1,668 1,265 1,357 834 2,190 620 613 290 19,580
Carrying Value
Amortized Cost
25% 4% 10% 6% 9% 6% 7% 4% 11% 3% 3% 1% 100%
233 134 1,520 4,272 867 1,893 1,018 1,483 1,211 1,965 878 2,148 597 491 382 19,092
$
$
Percent
244 137 1,608
1% 1% 8%
4,446 772 1,849 1,027 1,436 1,214 2,025 882 2,106 620 491 237 19,094
23% 4% 10% 5% 8% 6% 11% 5% 11% 3% 3% 1% 100%
Credit Quality of Fixed Maturity Securities at March 31, 2016 NAIC Designation
1 2 3 4 5 6
Fair Value (Dollars in millions) $ 10,106 6,602 989 283 73 4 $ 18,057
Percent
56% 37% 5% 2% —% —% 100%
Rating Agency Rating
AAA AA A BBB BB B and below
Fair Value (Dollars in millions) $ 1,524 1,868 4,654 7,381 1,123 1,507 $ 18,057
Percent
9% 10% 26% 41% 6% 8% 100% 18
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Managed and Direct Related Party Investments (Dollars in Millions) Type Investments managed by related parties: Salus collateralized loan obligations Fortress Investment Group collateralized loan obligations Salus participations (b) Energy & Infrastructure Capital ("EIC") participations
Direct investment in related parties: HGI energy loan Salus preferred equity Foreign exchange derivatives and embedded derivatives Salus promissory note (90 day term)
Assets above included in FSRCI Funds withheld portfolio: Fortress Investment Group collateralized loan obligations HGI energy loan Salus collateralized loan obligations Salus participations Salus preferred equity
Balance Sheet Classification Fixed maturities, available-for-sale Fixed maturities, available-for-sale Other invested assets Other invested assets Total investments managed by related parties
Related party loans Equity securities, available-for-sale Other invested assets Related party loans Total direct investment in related parties
Fixed Maturities, available-for-sale Related Party Loans Fixed Maturities, available-for-sale Other Invested Assets Equity securities, available-for-sale Total assets included in FSRCI Funds withheld portfolio
March 31, 2016 Amortized Fair Value Cost $
$
132 190 85 9 416
$
78 3 11 3 95
$
$
132 181 79 9 401
$
73 5 11 3 92
19 28 8 5 3 $
63
17 26 8 5 5 $
61
(b) Includes loan participations with 10 different borrowers with an average loan fair value of $8 as of March 31, 2016.
19
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation
Collateral Type Total by collateral type Government agency Prime Subprime Alt-A
Principal Amount
$
$ Total by NAIC designation 1 2 3 4 5
$
$
March 31, 2016 Amortized Cost (Dollars in millions)
117 267 403 1,042 1,829
$
1,803 8 — 18 — 1,829
$
$
$
Fair Value
122 229 346 784 1,481
$
1,458 7 — 16 — 1,481
$
$
$
125 227 350 780 1,482 1,462 7 — 13 — 1,482
20
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Top 10 Holdings by Issuers March 31, 2016
(Dollars in millions)
Issuer (a): Wells Fargo & Company Goldman Sachs Group, Inc. Metropolitan Transportation Authority (NY) General Electric Company JP Morgan Chase & Co. Bank of America Corp Nationwide Mutual Insurance Company
Rabobank Nederland Verizon Communications Inc. Metlife, Inc.
Percentage of Total Invested Assets
Fair Value $
159 141 120 113 106 102 92 87 83 82
0.8% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4%
(a) Issuers excluding U.S. Governmental securities and any securities held in our funds withheld portfolio.
21
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Reinsurance Counterparty Risk
Financial Strength Rating
(Dollars in millions) Parent Company/Principal Reinsurers
Reinsurance Recoverable (a)
Wilton Reinsurance
$
Front Street Re Scottish Re Security Life of Denver London Life
1,512 1,171 153 144 106
AM Best
S&P
Moody's
A
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
A
A
A2
A
Not Rated
Not Rated
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.
22
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Shareholder Information Corporate Offices: Fidelity & Guaranty Life Two Ruan Center 601 Locust Street, 14th Floor Des Moines, IA 50309 Investor Contact: Lisa Foxworthy-Parker Fidelity & Guaranty Life [email protected] 515-330-3307 Media Contact: Sard Verbinnen & Co Jamie Tully or David Millar, 212-687-8080 Common stock and Dividend Information: New York Stock Exchange symbol: "FGL"
High
Low
Dividend Declared
Close
FY2016 First Quarter Second Quarter
$ $
27.87 26.55
$ $
24.01 23.99
$ $
25.37 26.24
$ $
0.065 0.065
Transfer Agent American Stock Transfer & Trust 59 Maiden Lane, Plaza Level New York, NY 10038 Phone: (800) 937-5449 Fax: (718) 236-2641 http://www.amstock.com
23
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Research Analyst Coverage Jimmy Bhullar J.P. Morgan (212) 622-6397 jimmy.s.bhullar@jpmorgancom Sean Dargan Macquarie Capital (USA) Inc. 212-231-0663 [email protected] Eric Berg RBC Capital Markets (212) 618-7593 [email protected] John Barnidge Sandler O'Neill + Partners (312) 281-3412 [email protected]
24
Investor Supplement Second Fiscal Quarter 2016 (Fiscal Year Ended September 30) 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. The results of operations for interim periods should not be considered indicative of results to be expected for the full year. Non-GAAP Financial Measures This document contains non-GAAP financial measures to analyze the Company's operating performance for the periods presented. 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.
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement March 31, 2016 Page A.
Financial Highlights Consolidated Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Quarterly Summary - Most Recent 5 Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-GAAP Financial Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 4 5 6
Reconciliation from Net Income (Loss) to AOI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-GAAP Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 7
Summary of Adjustments to Arrive at AOI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AOI Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capitalization/Book Value per Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net Investment Spread Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sales Results by Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8 9 10 12 12
Product Summary Annuity Account Balance Rollforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annuity Deposits by Product Type. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Surrender Charge Protection and Account Values by Product Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annuity Liability Characteristics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 13 13 15
Investment Summary Summary of Invested Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Credit Quality of Fixed Maturity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Managed and Direct Related Party Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summary of Residential Mortgage Backed Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 18 19 20
D. Counterparty Risk Top 10 Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reinsurance Recoverable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21 22
E.
Shareholder Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
F.
Research Analyst Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23
B.
C.
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Consolidated Financial Highlights
March 31, 2016 Revenues: Premiums Net investment income Net investment gains (losses) Insurance and investment product fees and other Total revenues
December 31, 2015
Three Months Ended September 30, 2015 (Dollars in millions)
June 30, 2015
Six Months Ended March 31, March 31, 2016 2015
March 31, 2015
$
16 227 (42) 32 233
$
15 222 63 29 329
$
15 223 (112) 24 150
$
17 212 74 23 326
$
15 208 (58) 22 187
$ $
43 9
$ $
31 48
$ $
42 30
$ $
25 86
$ $
23 (12)
$
74 57
$
50 2
$ $
0.74 0.16
$ $
0.53 0.82
$ $
0.72 0.52
$ $
0.43 1.48
$ $
0.40 (0.21)
$ $
1.27 0.98
$ $
0.86 0.03
$ $
0.73 0.16
$ $
0.53 0.82
$ $
0.72 0.51
$ $
0.43 1.48
$ $
0.40 (0.21)
$ $
1.26 0.98
$ $
0.86 0.03
Dividends Paid to Shareholders Per Share
$
0.065
$
0.065
$
0.065
$
0.065
$
0.065
$
0.130
$
0.130
At Period End Cash and cash equivalents Total investments Total assets Contractholder funds Future policy benefits Notes payable Total equity Total equity excluding AOCI Common shares issued and outstanding
$ $ $ $ $ $ $ $
496 19,580 25,499 18,295 3,463 300 1,511 1,468 58.96
$ $ $ $ $ $ $ $
568 18,953 25,031 17,961 3,473 300 1,399 1,461 58.96
$ $ $ $ $ $ $ $
502 19,094 24,925 17,770 3,468 300 1,502 1,414 58.87
$ $ $ $ $ $ $ $
654 19,391 25,159 17,704 3,465 300 1,559 1,384 58.76
$ $ $ $ $ $ $ $
849 19,465 25,195 17,521 3,481 300 1,710 1,302 58.74
$ $ $ $ $ $ $ $
496 19,580 25,499 18,295 3,463 300 1,511 1,468 58.96
$ $ $ $ $ $ $ $
849 19,465 25,195 17,521 3,481 300 1,710 1,302 58.74
Adjusted Operating Income ("AOI") Net income (loss) Per Unrestricted Common Shares Amounts: Basic: AOI Net income (loss) Diluted: AOI Net income (loss)
GAAP Book value per share GAAP Book Value per Share excluding AOCI Debt to total Capitalization excluding AOCI Return on average shareholders' equity Statutory Book value per share(1) Statutory Book value per share excluding IMR and AVR(1)
$ $
$ $
25.63 24.90 17.0% 2.5% 21.28 31.43
$ $
$ $
23.73 24.78 17.0% 13.4% 21.13 31.55
$ $
$ $
25.51 24.02 17.5% 8.6% 20.79 31.40
$ $
$ $
26.53 23.55 17.8% 25.6% 21.02 31.70
$ $
$ $
$
29.11 $ 22.17 18.7 % (3.7)% 20.87 30.97
31 449 21 61 562
$
25.63 $ 24.90 17.0% 7.9% 21.28 31.43
26 416 1 42 485
29.11 22.17 18.7% 0.3% 20.87 30.97
(1) The statutory book value per share and the statutory book value per share excluding interest maintenance reserve ("IMR") and asset valuation reserve ("AVR") are estimates due to the timing of the filing of statutory statements and are prepared consistent with the presentation of the statutory financial statements in the combined annual statement.
3
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except per share data) March 31, 2016 ASSETS Investments: Fixed maturity securities, available-for-sale, at fair value (amortized cost: March 31, 2016 - $18,069; September 30, 2015 $17,622) Equity securities, available-for-sale, at fair value (amortized cost: March 31, 2016 - $584; September 30, 2015 - $597)
$
18,057
December 31, 2015
September 30, 2015
$
$
17,428
17,746
June 30, 2015
$
March 31, 2015
17,965
$
18,055
620
637
620
583
606
Derivative investments
158
145
82
220
268
Commercial mortgage loans
613
616
491
405
304
Other invested assets
132
127
155
218
232
Total investments
19,580
18,953
19,094
19,391
19,465
Related party loans Cash and cash equivalents Accrued investment income
76
81
78
77
75
496
568
502
654
849
209
181
191
164
180
Reinsurance recoverable
3,512
3,552
3,579
3,642
3,691
Intangibles, net
1,170
1,162
988
808
610
228
286
228
200
104
Deferred tax assets Other assets Total assets
228
248
265
223
221
$
25,499
$
25,031
$
24,925
$
25,159
$
25,195
$
18,295
$
17,961
$
17,770
$
17,704
$
17,521
LIABILITIES AND SHAREHOLDERS' EQUITY Contractholder funds Future policy benefits
3,463
3,473
3,468
3,465
3,481
Funds withheld for reinsurance liabilities
1,210
1,251
1,267
1,325
1,329
51
64
55
60
60
Debt
300
300
300
300
300
Other liabilities
669
583
563
746
794
23,988
23,632
23,423
23,600
23,485
Liability for policy and contract claims
Total liabilities Shareholders' equity: Preferred stock ($.01 par value, 50,000,000 shares authorized, no shares issued at March 31, 2016 and September 30, 2015)
$
Common stock ($.01 par value, 500,000,000 shares authorized, 58,964,396 issued and outstanding at March 31, 2016; 58,870,823 shares issued and outstanding at September 30, 2015)
—
$
—
$
—
$
—
$
—
1
1
1
1
1
Additional paid-in capital
720
718
714
711
710
Retained earnings
759
754
710
683
601
43
(62)
88
175
408
(12)
(12)
(11)
(11)
Accumulated other comprehensive income Treasury stock, at cost (537,613 shares at March 31, 2016; 512,391 shares at September 30, 2015)
1,511
Total shareholders' equity Total liabilities and shareholders' equity
$
25,499
$
(10)
1,399
$
1,502
$
1,559
$
1,710
25,031
$
24,925
$
25,159
$
25,195
4
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Quarterly Summary - Most Recent 5 Quarters Three Months Ended March 31, 2016 Revenues: Traditional life insurance premiums Life contingent immediate annuity Net investment income Net investment gains (losses) Surrender charges Cost of insurance fees and other income Total revenues Benefits and expenses: Traditional life insurance policy benefits and change in future policy benefits
$
11 $ 5 227 (42) 5 27 233
10 5 222 63 4 25 329
Six Months Ended
September 30, 2015 (Dollars in millions) $
June 30, 2015
11 $ 4 223 (112) 5 19 150
March 31, 2015
10 7 212 74 5 18 326
$
March 31, 2016
12 $ 3 208 (58) 5 17 187
21 10 449 21 10 51 562
March 31, 2015
$
22 4 416 1 9 33 485
16
18
18
20
17
34
36
21
32
30
29
26
53
36
151 25 75 (73) (3) 212 21 (6)
131 26 73 (71) 41 250 79 (6)
56 29 64 (63) (33) 101 49 (6)
$
15 6 9
$
73 25 48
$
43 13 30
$
29 22 72 (68) 88 192 134 (6) 128 42 86 $
$ $
0.16 0.16
$ $
0.82 0.82
$ $
0.52 0.51
$ $
1.48 1.48
Life contingent immediate annuity benefits and changes in future policy benefits Interest sensitive and index product benefits and changes in future policy benefits General expenses Acquisition expenses Deferred acquisition costs ("DAC") Amortization of intangibles Total benefits and expenses Operating income (loss) Interest expense Income (loss) before income taxes Income tax expense Net income (loss)
December 31, 2015
129 27 74 (73) (7) 193 (6) (6) (12) — (12) $
282 51 148 (144) 38 462 100 (12) 88 31 57 $
324 55 162 (160) 9 462 23 (12) 11 9 2
0.98 0.98
0.03 0.03
Net income (loss) per common share: Basic Diluted Weighted average common shares used in computing net income (loss) per common share: Basic Diluted
58.31 58.61
58.22 58.54
58.09 58.42
58.06 58.24
$ $
(0.21) $ (0.21) $
58.03 58.03
58.26 58.57
$ $
58.16 58.33
5
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Reconciliation from Net Income (Loss) to Adjusted Operating Income ("AOI ") All amounts are net of offsets related to value of business acquired ("VOBA") and deferred acquisition cost ("DAC") amortization and income taxes. Three Months Ended March 31, 2016
December 31, 2015
Six Months Ended
September 30, 2015
June 30, 2015
March 31, 2015
March 31, 2016
March 31, 2015
(Dollars in millions, except per share data)
Net income (loss) Adjustments to arrive at AOI:
$
Effect of investment (gains) losses, net of offsets Effect of change in FIA embedded derivative discount rate, net of offsets Effect of change in fair value of reinsurance related embedded derivative, net of offsets
Per diluted common share: Net income (loss) Adjustments to arrive at AOI:
48
$
30
$
86
(4) 29
3 (7)
8 23
(23) (21)
$
(12) $ 21 15
57
$
2
(1) 22
23 35
9
(13)
(19)
(17)
(1)
(4)
(9)
$
$
— 31
$
— 42
$
— 25
$
— 23
$
— 74
$
(1) 50
$
0.16
$
0.82
$
0.51
$
1.48
$
(0.21) $
0.98
$
(0.07) 0.49
Effect of investment (gains) losses, net of offsets Effect of change in FIA embedded derivative discount rate, net of offsets Effect of change in fair value of reinsurance related embedded derivative, net of offsets Effects of class action litigation reserves, net of offsets
AOI per diluted share
$
— 43
Effects of class action litigation reserves, net of offsets
AOI
9
$
0.15 — 0.73
0.05 (0.12)
$
(0.22) — 0.53 $
0.15 0.39 (0.33) — 0.72 $
(0.39) (0.37) (0.29) — 0.43 $
0.37 0.26 (0.02) — 0.40 $
(0.02) 0.38 (0.08) — 1.26 $
0.03 0.40 0.60 (0.15) (0.02) 0.86
6
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) NON-GAAP FINANCIAL MEASURES AOI AOI is a non-GAAP economic measure we use 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 our 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 reinsurance related embedded derivative, and (iv) the effect of class action litigation reserves. All adjustments to AOI are net of the corresponding VOBA, DAC and income tax impact (using an effective tax rate of 35%) related to these adjustments as appropriate. While these adjustments are an integral part of the overall performance of FGL, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective 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 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. 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.
7
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Summary of Adjustments to Arrive at AOI (Unaudited) Three Months Ended March 31, 2016
December 31, 2015
September 30, 2015
Six Months Ended June 30, 2015
March 31, 2015
March 31, 2016
March 31, 2015
(Dollars in millions)
Revenue: Net investment gains (a)
$
(21) $
(23) $
(81) $
49
(10) $
34
11
(21)
(23)
(81)
49
(10)
34
Benefits and other changes in policy reserves (b)
80
(19)
61
(64)
34
61
85
Acquisition and operating expenses, net of deferrals (c)
—
—
1
—
—
—
(1)
Increase (decrease) in total revenues
11
$
$
Benefits and expenses:
Amortization of intangibles
(39)
14
(21)
52
(29)
(25)
(45)
Increase (decrease) in total benefits and expenses
41
(5)
41
(12)
5
36
39
Increase (decrease) in pre-tax operating income
52
(26)
18
(93)
54
26
73
32
(19)
(9)
(25)
(Decrease) increase in income tax expense (benefit) Increase (decrease) in net income (loss)
(18) $
34
9 $
(17) $
(6) 12
$
(61) $
35
$
17
$
48
(a) Net investment gains: includes the effects of net investment gains and change in fair value of the reinsurance related embedded derivative. (b) Benefits and other changes in policy reserves: includes the effects of the change in fair value of the FIA embedded derivative discount rate. (c) Acquisition and operating expenses: includes the effects of the class action litigation reserve.
8
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) AOI Analysis (Unaudited)
Each quarterly reporting period, we identify notable items that explain the trends in our 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 or earnings calls to explain our AOI results. We believe that understanding these items provides further clarity to the financial performance of the business. Three Months Ended September 30, 2015
March 31, 2016
Six Months Ended June 30, 2015
December 31, 2015
March 31, 2015
March 31, 2016
March 31, 2015
$
$
(Dollars in millions)
AOI
$
43
$
31
$
42
$
25
$
23
74
50
Notable Items Included within AOI [(unfavorable)/favorable] Legacy incentive compensation (a)
—
(1)
(1)
(1)
(2)
(1)
(4)
Project expenses (b) Single premium immediate annuities ("SPIA") mortality & other reserve adjustments (c) Assumption review & DAC unlocking (d)
(1)
(2)
(2)
(1)
(1)
(3)
(2)
5
(3)
(5)
(2)
—
2
3
4
2
14
—
—
6
—
2
1
2
—
—
3
—
Tax valuation allowance / other (e)
(a) 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. (b) Expenses associated with corporate development activities, including mergers & acquisitions. (c) The release of annuity reserves associated with mortality of annuitants which varies due to timing, volume and severity of experience. (d) Annually in the 4th fiscal quarter, we complete our Annual Assumption Review & DAC Unlocking process by adjusting our valuation assumptions to align with actual experience. Also includes unlocking in other quarters from updating our DAC amortization models for actual experience and equity market fluctuations. (e) Changes in the Company's deferred tax valuation allowance and other net favorable activity.
9
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Capitalization/Book Value per Share March 31, 2016
Capitalization: Debt Total debt Total shareholders' equity Total capitalization AOCI Total capitalization excluding AOCI (a) Total shareholders' equity AOCI Total shareholders' equity excluding AOCI (a)
$
$
300 300 1,511 1,811 43 1,768
$
1,511 43 1,468
Common shares outstanding Book Value per Share: (b) GAAP Book value per share including AOCI GAAP Book value per share excluding AOCI (a)
December 31, September 30, June 30, 2015 2015 2015 (Dollars in millions, except per share data)
$
$
300 300 1,399 1,699 (62) 1,761
$
1,399 (62) 1,461
58.96 $ $
25.63 24.90
$
$
300 300 1,502 1,802 88 1,714
$
1,502 88 1,414
58.96 $ $
23.73 24.78
$
$
300 300 1,559 1,859 175 1,684
$
1,559 175 1,384
58.87 $ $
25.51 24.02
March 31, 2015
$
$
300 300 1,710 2,010 408 1,602
$
1,710 408 1,302
58.76 $ $
26.53 23.55
58.74 $ $
29.11 22.17
Twelve months ended Twelve Month Rolling Average Return on Equity ("ROE") Return on Shareholders' Equity (c) Return on average shareholders' equity, excluding AOCI (c) Return on Shareholders' Equity - AOI (d) Adjusted Operating ROE, excluding AOCI (d)
March 31, 2016
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
12.3%
11.0%
8.8%
9.6%
7.6 %
10.0%
8.8%
9.0%
7.8%
8.8 %
Three months ended Quarterly Average ROE Return on average shareholders' equity, excluding AOCI (c) Adjusted Operating ROE, excluding AOCI (d) Debt-to-Capital Ratios: (e) Long-term debt/Total capitalization excluding AOCI
March 31, 2016
December 31, 2015
September 30, 2015
June 30, 2015
March 31, 2015
2.0% 11.7%
13.4% 8.6%
8.6% 12.0%
25.6% 7.4%
(3.7)% 7.0 %
17.0%
17.0%
17.5%
17.8%
18.7 % 10
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) (a) Total capitalization, total stockholders’ equity and book value per share excluding AOCI (a non-GAAP financial measure) are based on stockholders’ 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, we believe these non-GAAP financial measures provide useful supplemental information. (b) Book value per share including and excluding AOCI is calculated as total stockholders’ equity and total stockholders’ equity excluding AOCI divided by the total number of shares of common stock outstanding. (c) Return on Equity, excluding AOCI is a non-GAAP measure. It is calculated by dividing net income by total average equity excluding AOCI. Average equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average equity is calculated using the beginning and ending equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. (d) Adjusted Operating ROE, excluding AOCI is a non-GAAP measure. It is calculated by dividing AOI by total average equity excluding AOCI. Average equity excluding AOCI for the twelve months rolling, is the average of 5 points throughout the period and for the quarterly average equity is calculated using the beginning and ending equity for the period. For periods less than a full fiscal year, amounts disclosed in the table are annualized. (e) Debt-to-capital ratios are computed using total capitalization excluding AOCI. Adjusted debt includes the total senior unsecured debentures.
Financial Strength Ratings S&P
A.M. Best
Moody's
Fitch
Fidelity and Guaranty Life Insurance Company
BBB-
Fidelity and Guaranty Life Insurance Company of New York
BBB-
B++
Baa3
BBB
B++
Not Rated
BBB
CreditWatch Developing
Under Review With Developing Implications
Positive
Ratings Watch Evolving
As of Date of Financial Supplement
Rating Agency Outlook
11
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Net Investment Spread Results Three Months Ended Six Months Ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 4.91 % 4.72 % 4.89 % 4.77 % (2.68)% (2.90)% (2.64)% (2.81)% 2.27 % 1.91 % 2.21 % 1.87 %
(Dollars in millions) Yield on average assets under management "AAUM" (at amortized cost) Less: Interest credited and option cost Total net investment spread - All product lines FIA net investment spread
2.93 %
2.91 %
2.94 %
2.90 %
Investment book yield - bonds purchased during the period (b)
6.10 %
4.73 %
5.75 %
4.95 %
AAUM (a)
$
18,465
$
17,616
$
18,349
$
17,434
(a) AAUM is a non-GAAP measure and is the sum of (i) total invested assets at amortized cost, excluding derivatives; and including (ii) related party loans and investments and (iii) cash and cash equivalents at the end of each month in the period divided by the number of months in the period. (b) Investment book yield on bonds purchased during the period excludes yield on short-term treasuries and cash and cash equivalents. Sales Results by Product (Dollars in millions)
Fixed index annuities Fixed rate annuities Index universal life All other products Total Sales
March 31, 2016 $ 418 183 11 — $ 612
Three Months Ended December 31, September 30, June 30, 2015 2015 2015 $ 437 $ 424 $ 507 52 9 12 13 11 10 — 1 5 $ 502 $ 445 $ 534
Six Months Ended March 31, 2015 $ 600 10 7 7 $ 624
March 31, March 31, 2016 2015 855 1,248 235 265 24 14 — 15 $ 1,114 $ 1,542
12
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Annuity Account Balance Rollforward (a)
Three months ended
(Dollars in millions) March 31, 2016
Account balances at beginning of period: Net deposits Premium and interest bonuses Fixed interest credited and index credits Guaranteed product rider fees Surrenders, withdrawals, deaths, etc. Account balance at end of period
$
$
December 31, 2015
14,330 $ 608 11 41 (14) (377) 14,599 $
September 30, 2015
14,154 $ 507 12 66 (13) (396) 14,330 $
June 30, 2015
14,000 $ 435 9 75 (8) (357) 14,154 $
March 31, 2015
13,655 $ 525 9 117 (9) (296) 14,001 $
13,254 608 9 115 (9) (322) 13,655
(a) The rollforward reflects the account balance of our fixed index annuities and fixed rate annuities. Annuity Deposits by Product Type
Three Months Ended March 31, March 31, 2016 2015 (Dollars in millions)
Product Type Fixed Index Annuities: Index Strategies Fixed Strategy
Six Months Ended
$
329 91 420
$
March 31, 2016
521 77 598
$
703 170 873
March 31, 2015
$
1,092 156 1,248
Fixed Rate Annuities: Single-Year Rate Guaranteed Multi-Year Rate Guaranteed
2 187
8 4
3 240
20 240
Total before coinsurance ceded Coinsurance ceded Net after coinsurance ceded
609 1 608
610 2 608
1,116 1 1,115
1,508 73 1,435
$
$
$
$
13
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Surrender Charge Protection and Account Values by Product Type Annuity Surrender Charges and Account Values (net of reinsurance) at March 31, 2016: Surrender Charge
Product Type Fixed Index Annuities Single-Year Rate Guaranteed Multi-Year Rate Guaranteed Total
Avg. Years Avg. Years at Issue Remaining 11 6 10 1 5 3
Net Account Value
Avg. % Dollars in Remaining millions 8% $ 11,646 1% 642 7% 2,311 $ 14,599
% 80% 4% 16% 100%
14
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
Annuity Liability Characteristics Fixed Fixed Index Annuities Annuities Account Account Value Value (Dollars in millions) SURRENDER CHARGE PERCENTAGES: No surrender charge 0.0% < 2.0% 2.0% < 4.0% 4.0% < 6.0% 6.0% < 8.0% 8.0% < 10.0% 10.0% or greater
$
$
SURRENDER CHARGE EXPIRATION BY YEAR: Out of Surrender Charge 2016 2017 - 2018 2019 - 2020 2021 - 2022 Thereafter
615 38 84 314 1,221 630 51 2,953
Fixed and Fixed Index Annuities Account Value (Dollars in millions) $
$
2,198 626 2,598 1,818 1,715 5,644 14,599
$
$
1,614 172 697 635 1,081 2,492 4,955 11,646
Weighted Average Surrender Charge
—% 3% 6% 8% 9% 11% 7%
15
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Fixed Fixed Index Annuities Annuities Account Account Value Value (Dollars in millions) CREDITED RATE (INCLUDING BONUS INTEREST) VS. ULTIMATE MINIMUM GUARANTEED RATE DIFFERENTIAL: No differential 0.0% - 1.0% 1.0% - 2.0% 2.0% - 3.0% 3.0% - 4.0% 4.0% - 5.0% Allocated to index strategies
$
1,104 461 291 1,040 57 — — 2,953
$
$
1,010 1,162 78 14 — — 9,382 11,646
$
FIXED INDEX ANNUITIES ACCOUNT VALUE - INDEX STRATEGIES Monthly Average, Point to Point and Gain Trigger Strategies with Cap Minimum Guaranteed Cap 1%
2%
Current Cap At minimum 2-3% 3-4% 4-5% 5-6% 6-7% 7% + Total:
$
$
— 145 596 311 42 25 42 1,161
$
$
3% 5% (Dollars in millions) — — — — — 1 11 12
$
$
1,005 — 613 632 502 68 143 2,963
$
$
6% 807 — — — 20 8 — 835
$
$
— — — — — 3 65 68
16
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Monthly Point-to-Point with Cap Minimum Guaranteed Cap 1% (Dollars in millions)
Current Cap At minimum 1% to 2% 2% to 3% 3% + Total:
$
362 2,361 958 349 4,030
$
3 Year Step Forward with Cap
Current Cap At minimum 2% to 5% 5% to 7% 7% to 9% 9% to 11% 11% to 13% 13% + Total:
Minimum Minimum Guaranteed Cap 2% Guaranteed Cap 5% (Dollars in millions) $
$
— — 3 — — — — 3
$
$
17 — 51 47 20 11 — 146
There is an additional $164 million Account Value allocated to strategies not listed above. Of this $164 million, $16 million is at the guaranteed rates.
17
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited)
Summary of Invested Assets by Asset Class (Dollars in millions)
March 31, 2016 Carrying Value
Amortized Cost Fixed maturity securities, available-for-sale: United States Government full faith and credit United States Government sponsored entities United States municipalities, states and territories Corporate securities: Finance, insurance and real estate Manufacturing, construction and mining
$
Utilities, energy and related sectors
Wholesale/retail trade Services, media and other Hybrid securities Non-agency residential mortgage-backed securities Commercial mortgage-backed securities Asset-backed securities Equity securities Commercial mortgage loans Other (primarily derivatives and loan participations) Total
$
233 122 1,525 4,623 922 2,003 1,074 1,699 1,310 1,359 847 2,352 584 613 361 19,627
$
$
September 30, 2015 Percent
244 125 1,666
1% $ 1% 9%
4,824 847 1,940 1,097 1,668 1,265 1,357 834 2,190 620 613 290 19,580
Carrying Value
Amortized Cost
25% 4% 10% 6% 9% 6% 7% 4% 11% 3% 3% 1% 100%
233 134 1,520 4,272 867 1,893 1,018 1,483 1,211 1,965 878 2,148 597 491 382 19,092
$
$
Percent
244 137 1,608
1% 1% 8%
4,446 772 1,849 1,027 1,436 1,214 2,025 882 2,106 620 491 237 19,094
23% 4% 10% 5% 8% 6% 11% 5% 11% 3% 3% 1% 100%
Credit Quality of Fixed Maturity Securities at March 31, 2016 NAIC Designation
1 2 3 4 5 6
Fair Value (Dollars in millions) $ 10,106 6,602 989 283 73 4 $ 18,057
Percent
56% 37% 5% 2% —% —% 100%
Rating Agency Rating
AAA AA A BBB BB B and below
Fair Value (Dollars in millions) $ 1,524 1,868 4,654 7,381 1,123 1,507 $ 18,057
Percent
9% 10% 26% 41% 6% 8% 100% 18
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Managed and Direct Related Party Investments (Dollars in Millions) Type Investments managed by related parties: Salus collateralized loan obligations Fortress Investment Group collateralized loan obligations Salus participations (b) Energy & Infrastructure Capital ("EIC") participations
Direct investment in related parties: HGI energy loan Salus preferred equity Foreign exchange derivatives and embedded derivatives Salus promissory note (90 day term)
Assets above included in FSRCI Funds withheld portfolio: Fortress Investment Group collateralized loan obligations HGI energy loan Salus collateralized loan obligations Salus participations Salus preferred equity
Balance Sheet Classification Fixed maturities, available-for-sale Fixed maturities, available-for-sale Other invested assets Other invested assets Total investments managed by related parties
Related party loans Equity securities, available-for-sale Other invested assets Related party loans Total direct investment in related parties
Fixed Maturities, available-for-sale Related Party Loans Fixed Maturities, available-for-sale Other Invested Assets Equity securities, available-for-sale Total assets included in FSRCI Funds withheld portfolio
March 31, 2016 Amortized Fair Value Cost $
$
132 190 85 9 416
$
78 3 11 3 95
$
$
132 181 79 9 401
$
73 5 11 3 92
19 28 8 5 3 $
63
17 26 8 5 5 $
61
(b) Includes loan participations with 10 different borrowers with an average loan fair value of $8 as of March 31, 2016.
19
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Summary of Residential Mortgage Backed Securities by Collateral Type and NAIC Designation
Collateral Type Total by collateral type Government agency Prime Subprime Alt-A
Principal Amount
$
$ Total by NAIC designation 1 2 3 4 5
$
$
March 31, 2016 Amortized Cost (Dollars in millions)
117 267 403 1,042 1,829
$
1,803 8 — 18 — 1,829
$
$
$
Fair Value
122 229 346 784 1,481
$
1,458 7 — 16 — 1,481
$
$
$
125 227 350 780 1,482 1,462 7 — 13 — 1,482
20
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Top 10 Holdings by Issuers March 31, 2016
(Dollars in millions)
Issuer (a): Wells Fargo & Company Goldman Sachs Group, Inc. Metropolitan Transportation Authority (NY) General Electric Company JP Morgan Chase & Co. Bank of America Corp Nationwide Mutual Insurance Company
Rabobank Nederland Verizon Communications Inc. Metlife, Inc.
Percentage of Total Invested Assets
Fair Value $
159 141 120 113 106 102 92 87 83 82
0.8% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4%
(a) Issuers excluding U.S. Governmental securities and any securities held in our funds withheld portfolio.
21
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Reinsurance Counterparty Risk
Financial Strength Rating
(Dollars in millions) Parent Company/Principal Reinsurers
Reinsurance Recoverable (a)
Wilton Reinsurance
$
Front Street Re Scottish Re Security Life of Denver London Life
1,512 1,171 153 144 106
AM Best
S&P
Moody's
A
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
Not Rated
A
A
A2
A
Not Rated
Not Rated
(a) Reinsurance recoverables do not include unearned ceded premiums that would be recovered in the event of early termination of certain traditional life policies.
22
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Shareholder Information Corporate Offices: Fidelity & Guaranty Life Two Ruan Center 601 Locust Street, 14th Floor Des Moines, IA 50309 Investor Contact: Lisa Foxworthy-Parker Fidelity & Guaranty Life [email protected] 515-330-3307 Media Contact: Sard Verbinnen & Co Jamie Tully or David Millar, 212-687-8080 Common stock and Dividend Information: New York Stock Exchange symbol: "FGL"
High
Low
Dividend Declared
Close
FY2016 First Quarter Second Quarter
$ $
27.87 26.55
$ $
24.01 23.99
$ $
25.37 26.24
$ $
0.065 0.065
Transfer Agent American Stock Transfer & Trust 59 Maiden Lane, Plaza Level New York, NY 10038 Phone: (800) 937-5449 Fax: (718) 236-2641 http://www.amstock.com
23
FIDELITY & GUARANTY LIFE AND SUBSIDIARIES Financial Supplement - March 31, 2016 (unaudited) Research Analyst Coverage Jimmy Bhullar J.P. Morgan (212) 622-6397 jimmy.s.bhullar@jpmorgancom Sean Dargan Macquarie Capital (USA) Inc. 212-231-0663 [email protected] Eric Berg RBC Capital Markets (212) 618-7593 [email protected] John Barnidge Sandler O'Neill + Partners (312) 281-3412 [email protected]
24
