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Fidelity & Guaranty Life Reports Fiscal Fourth Quarter 2016 Results
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PR Newswire
DES MOINES, Iowa, Nov. 16, 2016
DES MOINES, Iowa, Nov. 16, 2016 /PRNewswire/ -- Fidelity & Guaranty Life (NYSE: FGL), a leading provider of annuities and life insurance, today reported net income of $30 million or $0.52 per diluted common share, for the fiscal fourth quarter of 2016 ended on September 30, 2016(1). The Company reported adjusted operating income of $40 million, or $0.69 per diluted share, compared to adjusted operating income of $42 million, or $0.72 per diluted share, in the prior year period.
The table below reconciles reported after-tax net income to adjusted operating income ("AOI").
| | | | | | | | | | | | ||
| | | Three months ended | | | ||||||||
| (In millions) | | (Unaudited) | | | ||||||||
| Reconciliation from Net Income to AOI(2): | | 2016 | | 2015 | | Increase | ||||||
| Net income | | $ | 30 | | $ | 30 | | $ | — | |||
| Effect of investment losses (gains), net of offsets | | 5 | | 12 | | (7) | ||||||
| Effect of change in FIA embedded derivative discount rate, net of offsets | | (7) | | 35 | | (42) | ||||||
| Effect of change in fair value of reinsurance related embedded derivative, net of offsets | 17 | | (29) | | 46 | |||||||
| Tax impact of adjusting items | | (5) | | (6) | | 1 | ||||||
| Adjusted operating income | | $ | 40 | | $ | 42 | | $ | (2) | |||
| See footnotes at end of release. | | | | | | | | | | |||
The current quarter included net favorable items of $4 million or $0.07 per diluted share. The prior year quarter included net favorable items of $8 million or $0.14 per diluted share. The table below details notable items in both periods.
| | |||
| | Current Year Fiscal Quarter | | |
| | | • Net favorable adjustments related to lower deferred acquisition cost ("DAC") amortization, primarily due to equity market fluctuations, and bond prepayment income | $6 million |
| | | • Higher expenses related to long-term incentive compensation plans | ($2) million |
| | Prior Year Fiscal Quarter | | |
| | | • Net favorable adjustments related to annual actuarial assumption review, lower DAC amortization due to equity market fluctuations, and bond prepayment income | $16 million |
| | | • Unfavorable actual to expected mortality within single premium immediate annuity ("SPIA") product line | ($5) million |
| | | • Higher expense (legacy incentive compensation & merger transaction costs) | ($3) million |
| | | ||
"We delivered another strong quarter and full year with improvements across most of our key metrics, including sales, net investment income and spread, adjusted operating income, and assets under management," said Chris Littlefield, President and CEO of FGL. "Our FIA sales are up nicely over the prior year quarter while continuing to achieve our targeted profitability, and we have been growing our IUL business with existing and new distribution. In addition, we recently announced the extension of our merger agreement with Anbang. We are continuing the work to secure required regulatory approvals to complete the pending merger, and we remain committed to closing the transaction once the regulatory approval process concludes."
Fiscal Year 2016 Summary
FGL reported net income of $97 million, or $1.66 per diluted share, for fiscal year 2016, compared to net income of $118 million, or $2.02 per diluted share, for fiscal year 2015. The Company reported adjusted operating income of $162 million, or $2.77 per diluted share, for fiscal year 2016, compared to adjusted operating income of $118 million, or $2.02 per diluted share, for fiscal year 2015. The prior fiscal year included net favorable items of $2 million, whereby the $16 million benefit from the annual actuarial assumption review, lower DAC amortization due to equity market fluctuations, and bond prepayment income were partially offset by $4 million SPIA mortality losses and $10 million of expenses related to the legacy incentive compensation plan and merger transaction costs. The current fiscal year includes $17 million benefit from lower DAC amortization primarily due to equity market fluctuations, $6 million bond prepayment income and $7 million SPIA and other favorable reserve adjustments, partially offset by $6 million higher expense related to the pending merger transaction and long-term incentive compensation plans.
| Summary Financial Results (Unaudited) | | | ||||||||||||||
| | | | | | ||||||||||||
| | | Three months ended | | Year ended | ||||||||||||
| (In millions, except per share data) | | 2016 | | 2015 | | 2016 | | 2015 | ||||||||
| Fixed indexed annuity sales (2) | $ | 482 | | | $ | 424 | | | $ | 1,832 | | | $ | 2,179 | | |
| Total annuity sales (2) | | $ | 603 | | | $ | 434 | | | $ | 2,525 | | | $ | 2,466 | |
| Average assets under management (2) | $ | 19,381 | | | $ | 18,114 | | | $ | 18,738 | | | $ | 17,722 | | |
| Net investment spread - FIA (2) | 2.98 | % Werbung Mehr Nachrichten zur FIDELITY+GUAR.LIFE Aktie kostenlos abonnieren
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