Brighthouse Financial(BHF)2025-02-28 21:58Asset Management - The company reported total assets under management (AUM) of $203.023 billion as of December 31, 2024, compared to $203.727 billion as of December 31, 2023, reflecting a slight decrease of 0.35%[26]. - The Annuities segment generated $138.210 billion in total account assets as of December 31, 2024, an increase from $137.399 billion in 2023, representing a growth of 0.59%[28]. - The Shield Annuities segment saw an increase in account assets from $28.850 billion in 2023 to $32.152 billion in 2024, marking a growth of 11.96%[28]. - The account value for GMIBs was $41,202 million as of December 31, 2024, down from $44,028 million in 2023, a decrease of 6.4%[60]. - The total account value for variable annuities was $80,984 million at the end of 2024, compared to $84,297 million in 2023, reflecting a decline of 3.1%[66]. Revenue Generation - The company earned $2.6 billion in fees and charges on variable annuity contracts for both years ended December 31, 2024, and 2023, indicating stable revenue generation from this segment[39]. - Total deposits for variable annuities reached $8,300 million in 2024, up from $7,503 million in 2023, marking a 10.6% increase[52]. - Shield Annuities deposits increased to $7,671 million in 2024 from $6,857 million in 2023, representing a growth of 11.8%[52]. Risk Management - The company maintains a strong capital base and excess liquidity at the holding company, which is crucial for supporting financial strength ratings and risk management strategies[24]. - The company’s risk management approach aims to mitigate the effects of severe market disruptions, ensuring sustained long-term shareholder value[24]. - The company has shifted its business mix towards fixed products with lower guaranteed minimum crediting rates, enhancing its focus on risk-adjusted returns in the Annuities segment[27]. - The company utilizes various market scenarios to estimate impacts on statutory free cash flow and reserves, which may lead to material differences from actual outcomes[216]. - The company’s risk management strategy may negatively impact GAAP stockholders' equity and net income when interest rates rise[221]. Insurance Liabilities - The Annuities segment's insurance liabilities were reported at $60.824 billion for general account and $77.386 billion for separate account as of December 31, 2024[28]. - The insurance liabilities for life insurance products increased from $14,818 million in 2023 to $15,455 million in 2024, reflecting a growth of about 4.3%[71]. - The total insurance liabilities in the Run-off segment increased from $28,279 million in 2023 to $26,880 million in 2024, indicating a decrease of about 1.4%[83]. Product Development and Innovation - The company continues to innovate in product design, responding to customer and distributor needs, which is expected to enhance market presence over the long term[30]. - The company launched updated versions of Shield Annuities in July 2024, aiming to enhance product offerings and market competitiveness[51]. - The company focuses on term life and universal life products with index-linked benefits to enhance profitability rather than volume[70]. Regulatory Compliance - The RBC ratio is calculated as total adjusted capital (TAC) divided by the applicable company action level RBC, which is essential for regulatory compliance[115]. - Companies below 100% of the company action level RBC are subject to corrective action, which may include limiting or prohibiting sales to policyholders[115]. - The NAIC has proposed changes to asset adequacy testing requirements for ceded reinsurance, with compliance required on a disclosure-only basis for 2025[117]. - The NAIC adopted a new principles-based bond definition effective January 1, 2025, which may alter the classification and measurement of fixed income instruments[118]. Employee and Organizational Development - The company had approximately 1,400 employees as of December 31, 2024, highlighting its human capital resources[182]. - The company offers a 401(k) savings plan with matching contributions and an Employee Stock Purchase Plan, promoting employee financial well-being[187]. - The company launched employee network groups in 2022 to enhance inclusivity and support among employees[190]. Market Competition - The U.S. life insurance industry comprises 719 companies, indicating a highly competitive market with no single company dominating all product offerings[179]. - Key competitive factors in the annuities business include product features, distribution channel relationships, and financial strength ratings[180]. Financial Condition and Capital Management - The company may face liquidity challenges if it needs to sell higher-yielding, less liquid assets to cover increased obligations, which could adversely affect its financial condition[222]. - Changes in capital markets scenarios could materially affect the company's statutory free cash flow and reserving requirements, impacting overall profitability[218]. - The company’s RBC ratios and financial strength ratings are critical for supporting product sales and may be impacted by liquidity and capitalization issues[222]. Cybersecurity and Privacy Regulations - The SEC's Cybersecurity Final Rule adopted in July 2023 mandates disclosure of material cybersecurity incidents and requires periodic disclosures of cybersecurity risk management processes[146]. - The California Consumer Privacy Act (CCPA) amendments effective January 1, 2023, require additional investments in compliance programs and impose new consumer rights and obligations[143]. - The company anticipates potential future impacts from evolving privacy and cybersecurity regulations, which may affect business practices and financial condition[147].