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Fidelity National Group (FGL) is a life insurance business based in the Cayman Islands, sometimes known as FGL Holdings. The corporation offers annuities and life insurance in addition to other life and annuity reinsurance products, both altogether and through reinsurance arrangements. FGL Holdings stock is traded on the NYSE under the ticker symbol FG.
Financial Results for FGL Holdings:
As of November 11, FGL Holdings' most recent Quarterly Earnings Report (Form 10-Q), was made public. The corporation reported $387 million in net income, $413 million in revenue, and $4.03 earnings per share (diluted). Compared to the same period in 2021, this represents growth of 10.2% in revenue, 9.5% in net income, and 12.3% in earnings per diluted share. A $2.8 billion total equity investment loss also contributed to a $3.1 billion annualized return on equity (ROE) for the corporation. Compared to $1.4 billion at the start of 2022, FGL Holdings had $878 million in cash and short-term investments as of September 30.
For the third quarter of 2022, FGL Holdings reported a combined ratio of 94.1%. This is a reduction from the same time in 2021 when the percentage was 96.2%. The corporation recorded a $34.6 million underwriting loss, which is an improvement over the $58.3 million in the same period in 2021. A decrease in losses brought about by lower natural catastrophe losses and higher favorable reserve development. The former accounts for $8.4 million of that total, while the latter amounts to $44.6 million in benefit. The $3.9 million underwriting loss brought on by less favorable prior-year loss reserves was partially offset by the $12.6 million decrease in current accident year losses.
The long-term care and life and annuity segments of FGL Holdings' business performed as follows: Life and annuities: A decrease of (3.5) % resulted in a segment margin of $27.2 million. Long-term care: A segment profit of $23.8 million represented a $21.2 million or 165.8% boost.
As of November 16, Fitch Ratings maintains its rating of 'Baa3' for the corporation, with a 'stable' outlook. The business asserts that FG's ratings reflect its strong risk-based capitalization, high-quality investment portfolio, consistent business mix, and balanced profitability profile. Despite experiencing market fluctuations, FG has delivered strong earnings over the long run due to careful risk selection and underwriting discipline.
Value Analysis:
Using a price-to-book value of 0.94 as of November 11, FGL Holdings trades at a discount. The whole US life insurance sector has a 0.99 P/B ratio. This suggests that investors can purchase FGL Holdings' stock at a 5% discount compared to the sector average. The price-to-earnings ratio is 4.41. The earnings multiple has fallen from its five-year average of 5.7. This suggests that analysts' forecasts of FGL Holdings' future earnings growth have decreased. Using historical data from 2020 to 2022, there would be a stronger argument for a buy if the historical PEG ratio was applied, which was 0.55.
The corporation has experienced steady profitability over the long run despite market fluctuations. Because of the $3.1 billion return on equity (ROE) for the business over the previous 12 months, the stock's price has increased by 3.9% over the same time. This return is slightly higher than the industry average. The fact that FGL Holdings' PEG ratio is lower than usual could indicate a buying opportunity.
Growth Prospects:
One benefit of investing in FGL Holdings is the ROE of $3.1 billion over the past 12 months. For the third quarter of 2022, the consensus EPS estimate of $4.03 resulted in a positive surprise of 12%. Year over year, this increase from the same period in the prior year was 10.2%.
FGL Holdings has made significant investments in technology. These technologies use data and analytics to enhance underwriting decisions and pinpoint expanding market possibilities. Artificial intelligence uses machine learning to help FGL Holdings find potential prospects and speed up underwriting procedures, improving customer experiences, and lowering expenses.
FGL Holdings has declared a $0.07 per share quarterly payment to shareholders, or $0.28 annually. Based on the $5.42 close on November 11, this produces a 5.15% dividend yield. This yield is significantly higher than the industry average of 0.43%. Since the dividend has been consistent since 2014, it is a consistent payer. By having this information on hand, investors can better target returns in their income-generating methods.