Brighthouse Financial(US:BHF)2020-11-06 16:30Financial Data and Key Metrics Changes - The company reported third quarter adjusted earnings of $388 million, a significant increase from $39 million in the second quarter of 2020 and $260 million in the third quarter of 2019 [31] - The estimated combined risk-based capital (RBC) ratio increased to a range of 525% to 545% [19][26] - Total adjusted capital (TAC) rose to $8.4 billion as of September 30, up from $7.7 billion at June 30 [25] Business Line Data and Key Metrics Changes - Annuity sales reached approximately $2.3 billion, up 29% year-over-year and 27% sequentially [14] - Life insurance sales generated approximately $13 million in the third quarter of 2020 [14] - Annuities adjusted earnings, excluding notable items, were $285 million, reflecting higher net investment income and fees [35] Market Data and Key Metrics Changes - Total annuity net inflows were $174 million, driven by strong sales and fewer policy surrenders [15] - The company noted a 47% year-over-year increase in fixed products sales within the industry [50] Company Strategy and Development Direction - The company remains focused on its strategy to unlock capital, repurchase stock, rationalize expenses, and sell new business [39] - Investments in technology infrastructure continue, with establishment costs of approximately $19 million before tax in the third quarter [17] - The company aims to reduce corporate expenses by $150 million on a run rate basis by the end of the year [16] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of financial security during the ongoing COVID-19 pandemic and expressed confidence in the company's strong balance sheet and liquidity [10][18] - The company plans to take a $450 million dividend from Brighthouse Life Insurance Company and a $60 million dividend from New England Life Insurance Company in the fourth quarter [29] Other Important Information - The company has repurchased approximately $980 million of its common stock since August 2018, representing a reduction of over 25% of shares outstanding [11] - The normalized statutory loss for the quarter was approximately $200 million, driven by an increase in the 20-year swap rate [19][25] Q&A Session Summary Question: Market interest in VA risk transfer - Management acknowledged the potential for future transactions if they add value and are executable, while maintaining their current strategy [39] Question: Drivers of adjusted statutory earnings - Management noted that the normalized statutory loss was driven by basis risk between their derivatives portfolio and liabilities, with a significant increase in the 20-year swap rate [42] Question: Dividend capacity for 2021 - Management confirmed plans to take the remaining dividend from BLIC and indicated that unassigned funds improved to approximately $1.5 billion, providing capacity for future dividends [46] Question: Trends in annuity sales - Management reported strong sales results, particularly in fixed annuities, and noted a positive trend in sales despite the challenging environment [50] Question: COVID-19 claims sensitivity - Management indicated that the impact of COVID-19 on the insured population has been less pronounced than expected, with year-to-date claims significantly lower than initial guidance [68] Question: Future capital release and stress scenarios - Management stated that the investment stress scenario impact on RBC has been better than expected, with minimal impairments and downgrades [71]