FG

F&G Annuities & Life ($FG): $151M Insider Buying Spree Signals Potential Undervaluation After Earnings Dip

03/31/2025 13:20

Shares of F&G Annuities & Life ($FG) have seen significant insider buying activity following a sharp decline after February earnings results, drawing heightened investor attention. CEO Christopher Blunt made a bold statement by purchasing 10,000 shares on three consecutive days in late March, acquiring a total of 30,000 shares at an average price of $35.55, representing an investment of approximately $1.06 million. Even more notable was major shareholder Fidelity National Financial ($FNF), which acquired 4.5 million shares at $33.60, amounting to a massive $151.2 million investment. F&G Annuities & Life provides insurance solutions serving both retail and institutional clients. The company offers fixed indexed annuities, multi-year guarantee annuities, immediate annuities, indexed universal life insurance, and pension risk transfer solutions. Its current market capitalization stands at approximately $4.5 billion. The stock had been on a steady upward trajectory since November of last year, reaching around $47 by mid-February 2025. However, following the February 21st Q4 earnings announcement, shares plummeted 8.2% in a single day, continuing their descent to around $35 by late March – representing a decline of over 30% from the 52-week high of $50.75. The February 21st earnings report revealed that the company posted a profit of $1.12 per share for Q4, falling short of analyst expectations of $1.20. According to Piper Sandler's analysis, this earnings shortfall was attributed to decreased net investment income resulting from recent interest rate cuts. Additionally, Q4 net sales dropped to $2.44 billion, marking the first year-over-year decline since Q2 2023. Amid this backdrop, the wave of insider purchases is particularly noteworthy. Along with CEO Blunt's three consecutive days of buying, Director Celina Wang Doka purchased 3,000 shares at $35.24, while EVP Michael Gravelle acquired 7,000 shares at $36.00. These transactions collectively suggest a strong belief among insiders that the company's stock is significantly undervalued. Fidelity National Financial's massive purchase sends an especially powerful signal. As F&G's major shareholder and parent company, FNF is uniquely positioned to understand the company's business and financial condition. This investment of over $151 million can be interpreted as a strong message that the current stock price decline does not reflect the company's long-term value. F&G's current financial metrics also suggest potential undervaluation. The stock trades at a trailing P/E of 7.34 and a forward P/E of 6.89, both below industry averages. Its price-to-book ratio of 1.36 and price-to-sales ratio of 0.96 are also at reasonable levels. The annual dividend of $0.88 provides a yield of approximately 2.46% at current prices. The financial services industry, particularly the annuity business, is sensitive to interest rate environments. While the recent rate cut cycle may negatively impact investment income in the short term, it can also make annuity products more attractive to consumers over the longer term, potentially driving new business growth. This may explain why insiders remain confident despite the recent investment income decline due to rate cuts. Wall Street remains cautiously optimistic, with three analysts maintaining a consensus "Hold" rating and an average 12-month price target of $46.67, suggesting an upside potential of approximately 30% from current levels. Investors will be closely watching the upcoming Q1 earnings announcement in early May, which will provide important indicators of how the company is managing the impact of reduced investment income and whether new business growth is accelerating. The extraordinary level of insider buying suggests that the current price decline may be temporary and could represent a compelling entry point from a long-term value perspective. However, investors should remain mindful of external risk factors, including changes in interest rate environments and competitive dynamics in the annuity market.

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