Life Insurance: FABN Findings 1Q26 Edition

Research evidence excerpt

Life Insurance: FABN Findings 1Q26 Edition

Equity Research

Industry Update — May 19, 2026

Life Insurance

Spread Too Thin?

Our Call Wes Carmichael, CFA

Lower potential returns, particularly in 1Q26, have dampened the FABN market's boom Equity Analyst | Wells Fargo Securities, LLC

Wesley.C.Carmichael@wellsfargo.com | 212-214-5335

somewhat, at least relative to 2025. But FABN outstanding has reached ~$250b, and the

market continues to favor mutuals and traditional LifeCos with track records.

FABN saw record annual issuance of ~$80b in 2025; activity continues into 2026 at

a more modest pace. Year-to-date, 2026 issuance of $25b looks to be on pace for a

"healthy" year but is likely to be well below 2025 records, in our view. Returns on new

FABN issuance have declined as Financials saw credit spreads increase relative to other

sectors in the fixed income market in 1Q ("negative arb"). We expect measured issuance

going forward and saw new issues from RGA and PRU this week.

A look into upcoming FABN maturities. FABN programs are generally supposed to be

tightly ALM-matched within segregated portfolios, but maturities of FABNs over the next

12-24 months are significant. In terms of maturity volumes, Athene, MetLife, and New

York Life will all see maturities in excess of $15b over the next couple of years. Insurers

with the highest level of maturities relative to outstanding programs over the next two

years include Delaware Life, Brighthouse, and Athene (all >50%).

Examining recent issuance spreads and theoretical ROEs. We also look into recent

issuance spreads relative to relevant risk-free benchmarks, and in general mutual

companies and incumbent traditional insurers benefit from lower spreads vs. Alts-

affiliated players.