Brighthouse Financial(US:BHF)2025-05-09 13:02Financial Data and Key Metrics Changes - Brighthouse Financial reported a statutory combined total adjusted capital (TAC) of approximately $5,500 million at March 31, compared to approximately $5,400 million at December 31 [17] - The estimated combined risk-based capital (RBC) ratio was between 420% and 440%, within the target range of 400% to 450% in normal market conditions [17][19] - Adjusted earnings for the quarter were $235 million, including an unfavorable notable item of $10 million, compared to $352 million in the fourth quarter of 2024 and $268 million in the first quarter of 2024 [19][20] Business Line Data and Key Metrics Changes - Total annuity sales were approximately $2,300 million, including $2,000 million in Shield sales, which increased 3% sequentially and 5% year-over-year [11] - Life insurance sales totaled $36 million, representing a 24% increase compared to the first quarter of 2024 and a 9% increase sequentially [12] - The Annuities segment reported adjusted earnings of $324 million, relatively flat sequentially, while the Life segment reported adjusted earnings of $9 million, reflecting lower underwriting margins and higher expenses [21] Market Data and Key Metrics Changes - The company experienced modestly lower outflows compared to the fourth quarter, driven by variable annuities (VA) and Shield outflows, particularly full surrenders [30] - The company expects flows in 2025 to be at or above 2024 levels, with a substantial amount of fixed-rate annuities coming out of surrender in the second half of 2025 [31][101] Company Strategy and Development Direction - The company is focused on capital efficiency and has made progress on capital-focused strategic initiatives, including simplifying its variable annuity hedging strategy [9][18] - Brighthouse Financial aims to protect its statutory balance sheet under adverse market scenarios while continuing to drive sales growth in both annuities and life insurance [10][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current macro environment, emphasizing a strong balance sheet and robust liquidity position [14][15] - The company remains optimistic about growth opportunities, particularly in the RILA market and through the LifePath Paycheck product [94] Other Important Information - Corporate expenses for the quarter were $239 million, higher than expected, but management anticipates normalization for the remainder of 2025 [13] - The company repurchased $59 million of common stock in the quarter, with an additional $26 million repurchased through May 6 [14] Q&A Session Summary Question: Benefit of the 25 basis point increase in mean reversion point to normalized statutory earnings - Management indicated it was around $200 million [25] Question: Outlook for sales and fixed annuities - Management noted that sales have fluctuated and are dependent on competitive rates, with plans to build momentum for fixed sales [26][27] Question: Trends in flows and surrender activity - Management expects flows to be at 2024 levels or higher, with significant fixed-rate annuities coming out of surrender in 2025 [30][31] Question: RBC movements and other pushes and pulls - Management confirmed that the mean reversion change was closer to 15 percentage points, with additional factors affecting RBC [37][39] Question: Actions to increase value and reinsurance options - Management is considering flow reinsurance and focusing on simplifying the hedging strategy for in-force business [41][42] Question: Distributable earnings from BLIC in 2025 - Management did not provide specifics but indicated a three-year plan for dividends from operating companies [48] Question: Industry transactions and market dynamics - Management is monitoring industry transactions and their implications for Brighthouse's strategy [110][112] Question: RBC ratio and potential drops in Q2 - Management refrained from providing quarterly RBC forecasts but acknowledged potential fluctuations [119] Question: Strategic initiatives and capital constraints - Management emphasized the importance of unlocking capital while remaining unconstrained for growth [120]