F&G Annuities Targets 25% Fee-Based Earnings to Close Valuation Gap

F&G Annuities & Life Inc. is shifting toward a fee-based business model. The company aims to reach 25% fee-based earnings by 2028 as management works to narrow the gap between the firm's market capitalization and its book value.

This target marks a change for the firm, which reported nearly 0% fee-based earnings in 2022 and expects to reach 15% by 2025. According to a company transcript from the Barclays conference, leadership views this transition as a way to improve capital efficiency and market perception.

Addressing the Valuation Disconnect

Management highlighted a disparity in the firm's financial standing. The company's book value sits at approximately $6 billion, while its market capitalization is currently valued at roughly $3 billion. As of September 16, 2026, F&G Annuities & Life Inc (FG) closed at $23.28 per share.

Investment Strategy and Risk Management

To support its capital-intensive annuity business, the company relies on a specialized approach to private credit. The firm prioritizes traditional middle-market and asset-backed lending while exercising caution regarding newer asset classes.

"The investment team focuses on middle market lending and asset-backed lending. Punjabi said F&G invests in the first and second bucket of private credit, but avoids the third bucket, which includes entirely new asset classes. Examples of avoided areas include buy now, pay later exposure, where historical performance data is limited," said Leena Punjabi, Chief Investment Officer, in a statement regarding the firm's risk management strategy.

What Is at Stake

For insurers, the move toward fee-based income is a strategy to reduce reliance on net investment spreads, which can be sensitive to interest rate volatility. By diversifying revenue streams, F&G aims to demonstrate a stable earnings profile to investors. The success of this transition is a focal point for the company as it attempts to align its public valuation more closely with its underlying book value.