Brighthouse Financial ((BHF)) has held its Q1 earnings call. Read on for the main highlights of the call.
Brighthouse Financial’s recent earnings call conveyed a generally positive sentiment, underscored by strong sales growth in annuities and life insurance, a robust liquidity position, and significant progress in strategic initiatives. Despite challenges such as a decline in fixed annuity sales, higher corporate expenses, and lower-than-expected alternative investment income, the overall outlook remains optimistic due to effective capital management and strategic advancements.
Strong Annuity and Life Insurance Sales
Brighthouse Financial reported impressive annuity sales totaling approximately $2.3 billion, with Shield sales accounting for $2 billion, reflecting a 3% sequential increase and a 5% rise compared to the first quarter of 2024. Life insurance sales also saw a substantial growth of 24% compared to Q1 2024, highlighting the company’s strong performance in these sectors.
Holding Company Liquid Assets and RBC Ratio
The company concluded the quarter with holding company liquid assets of around $1 billion and an estimated RBC ratio between 420% and 440%, comfortably within their target range of 400% to 450%. This indicates a solid liquidity position, supporting the company’s financial stability.
Progress in Hedging Strategy
Brighthouse Financial has successfully transitioned to hedging new Shield annuity business on a standalone basis. This move simplifies their hedging strategy and enhances capital efficiency, marking a significant step forward in their strategic initiatives.
Capital Return to Shareholders
In a demonstration of commitment to shareholder value, the company repurchased $59 million of common stock during the quarter, with an additional $26 million repurchased by May 6th. This reflects Brighthouse Financial’s focus on returning capital to its shareholders.
Statutory Earnings and Capital Strength
Normalized statutory earnings for the quarter were approximately $300 million, benefiting from a 25 basis point increase in the prescribed 20-year treasury yield mean reversion point. This underscores the company’s strong capital position and earnings capacity.
Decline in Fixed Annuity Sales
Despite the overall growth in annuity sales, there was a 21% decline in fixed annuity sales compared to the first quarter of 2024. This decrease poses a challenge that the company will need to address moving forward.
Higher Corporate Expenses
Corporate expenses for the quarter were $239 million on a pre-tax basis, exceeding the expected run rate. However, these expenses are anticipated to normalize for the remainder of 2025, suggesting a temporary setback.
Alternative Investment Income Below Expectations
The alternative investment income was $39 million, falling short of the quarterly average run rate expectation, with a portfolio yield of 1.4%. This shortfall highlights an area for potential improvement in the company’s investment strategy.
Forward-Looking Guidance
Looking ahead, Brighthouse Financial maintains a positive outlook with holding company liquid assets of approximately $1 billion and an RBC ratio between 420% and 440%, aligning with their target. Total annuity sales are projected to continue their upward trend, supported by strong Shield sales. While corporate expenses exceeded expectations, they are expected to stabilize, providing a more predictable financial landscape for the rest of 2025.
In summary, Brighthouse Financial’s earnings call reflects a positive sentiment, driven by robust sales in annuities and life insurance, strategic progress, and strong capital management. Despite facing challenges such as declining fixed annuity sales and higher corporate expenses, the company remains optimistic about its future prospects, supported by a solid financial foundation and strategic initiatives.