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01/11 03:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary indicates several negative factors: slowed Shield sales due to competition, unclear responses on buybacks and cash flow issues, and heightened claims severity. Although management expressed confidence in their capabilities, the lack of quantitative guidance and avoidance of certain questions suggest underlying uncertainties. The market may react negatively due to these ambiguities and potential risks.
Total Annuity Sales $2.6 billion, a 16% increase sequentially and an 8% increase compared with the second quarter of 2024. The increase was driven by strong sales in both annuities and life insurance, with Shield sales being a significant contributor.
Shield Sales $1.9 billion in the quarter, bringing year-to-date Shield sales to $3.9 billion, consistent with the same period last year. Shield sales were a significant contributor to total annuity sales.
Fixed Annuities Sales $500 million in the quarter. This was the second largest contributor to total annuity sales.
Life Insurance Sales $33 million in the second quarter, contributing to record year-to-date life insurance sales of $69 million, an increase of approximately 21% compared with the same period in 2024. The increase was attributed to strong sales performance.
Corporate Expenses $202 million on a pretax basis, down from $239 million in the first quarter, and up slightly from $200 million in the second quarter of 2024. The slight year-over-year increase was due to controlled expense management.
Common Stock Repurchases $43 million in the second quarter, bringing year-to-date repurchases to $102 million. Since the program began in August 2018, over $2.6 billion of common stock has been repurchased, representing 52% of outstanding shares.
Adjusted Earnings $198 million or $3.43 per share, compared with $346 million in the second quarter of 2024. The decrease was driven by lower alternative investment income and a lower underwriting margin.
Alternative Investment Portfolio Yield 1.5% in the quarter, resulting in lower alternative investment income of $32 million or approximately $0.55 below the quarterly average run rate expectation. Over the long term, the expected yield is 9% to 11% annually.
Annuities Segment Adjusted Earnings $332 million, reflecting lower expenses, partially offset by lower fees due to lower average separate account balances sequentially.
Life Segment Adjusted Loss $26 million, reflecting a lower underwriting margin and lower net investment income, partially offset by lower expenses.
Run-off Segment Adjusted Loss $83 million, reflecting a lower underwriting margin, partially offset by higher net investment income and lower expenses.
Corporate and Other Segment Adjusted Loss $25 million, which was flat sequentially.
Annuity Sales: Total annuity sales were $2.6 billion, a 16% increase sequentially and an 8% increase compared with the second quarter of 2024. Shield sales contributed $1.9 billion, and fixed annuities contributed $500 million.
Life Insurance Sales: Life insurance sales in the second quarter were $33 million, contributing to record year-to-date sales of $69 million, a 21% increase compared to the same period in 2024.
BlackRock's LifePath Paycheck Deposits: Received $176 million of deposits through BlackRock's LifePath Paycheck product in the second quarter.
Market Positioning through BlackRock Partnership: The involvement with BlackRock's LifePath Paycheck product is expected to enable Brighthouse to reach new customers through the worksite channel.
Expense Management: Second quarter corporate expenses were $202 million, down from $239 million in the first quarter, and slightly up from $200 million in the second quarter of 2024.
Capital and Liquidity Position: Maintained a strong liquidity position with liquid assets at the holding company exceeding $900 million as of June 30. The estimated combined RBC ratio was between 405% and 425%, within the target range of 400%-450%.
Capital-Focused Strategic Initiatives: Progressed on initiatives to simplify and revise hedging strategies for in-force variable annuity and first-generation Shield books of business. Transition to revised hedging strategy expected to complete by September 2025.
Shareholder Returns: Returned $43 million to shareholders through common stock repurchases in Q2, bringing year-to-date repurchases to $102 million. Since 2018, over $2.6 billion of common stock has been repurchased, representing 52% of outstanding shares.
Combined Risk-Based Capital (RBC) Ratio: The RBC ratio decreased during the period due to seasonality, capital charges for fixed business, and adverse non-VA results, partially driven by mortality. This could impact the company's ability to maintain its target range in adverse market conditions.
Hedging Strategy Transition: The company is transitioning its hedging strategy for in-force variable annuity and first-generation Shield business. Any delays or inefficiencies in this transition could expose the company to financial risks, especially under adverse market scenarios.
Alternative Investment Income: The alternative investment portfolio yielded only 1.5% in the quarter, significantly below the long-term expectation of 9%-11%. This underperformance contributed to lower adjusted earnings and could impact financial stability if it persists.
Underwriting Margin: The company experienced a lower underwriting margin due to higher average severity of claims. This fluctuation in mortality and claims severity could adversely affect financial results.
Life Segment Performance: The Life segment reported an adjusted loss of $26 million, driven by a lower underwriting margin and lower net investment income. This underperformance could hinder the company's overall profitability.
Run-off Segment Performance: The Run-off segment reported an adjusted loss of $83 million, reflecting a lower underwriting margin. Persistent losses in this segment could strain financial resources.
Capital-focused strategic initiatives: The company plans to complete the transition to a revised hedging strategy for its in-force variable annuity and first-generation Shield annuity block of business by the end of September 2025. This includes managing the VA and Shield businesses separately.
Risk-based capital (RBC) ratio: The company aims to maintain a target combined RBC ratio between 400% and 450% under normal market conditions. As of June 30, 2025, the estimated RBC ratio was between 405% and 425%.
Alternative investment portfolio yield: Over the long term, the company expects a yield of 9% to 11% annually on its alternative investment portfolio.
Expense management: The company remains committed to disciplined expense management to support its financial goals.
Share Repurchase Program: In the second quarter, Brighthouse Financial returned capital to shareholders through $43 million of common stock repurchases, bringing year-to-date common stock repurchases through June 30 to $102 million. Since the inception of the common stock repurchase program in August 2018, the company has repurchased over $2.6 billion of its common stock, representing 52% of its outstanding shares. The most recent Rule 10b5-1 plan for share repurchases expired at the end of May 2025, and no additional share repurchases have occurred since that date. The company has $441 million of capacity remaining under its Board-approved share repurchase program.
The earnings call summary indicates several negative factors: slowed Shield sales due to competition, unclear responses on buybacks and cash flow issues, and heightened claims severity. Although management expressed confidence in their capabilities, the lack of quantitative guidance and avoidance of certain questions suggest underlying uncertainties. The market may react negatively due to these ambiguities and potential risks.
The earnings call summary reveals several negative factors: the company is operating below its RBC target range, faces risks with a reinsurance agreement, and has lower-than-expected investment returns. Despite share repurchases, financial metrics are weak with declining earnings. Management's vague responses in the Q&A add uncertainty. While there are positive aspects like increased life insurance sales, the overall sentiment is negative, especially given the market cap of $2.7 billion, which suggests a moderate reaction to these developments.
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