May 8, 2024

Brighthouse touts ‘positive’ Q1 results, takes $366M reinsurance charge

Brighthouse Financial, one of the nation’s largest providers of annuities and life insurance, sought to assure investors Thursday with first quarter 2024 results showing sales growth, a strong balance sheet, successful new product introductions, and burgeoning assets.

But it could hardly overlook the quarterly net loss of $519 million, mostly the result of a $366 million “unfavorable item,” related to a retroactive reinsurance premium rate increase that had been in arbitration.

Overall, executives at Charlotte, N.C.-based Brighthouse, which seven years ago was spun out of MetLife, said the first-quarter results were “positive,” with $1.3 billion of liquid assets and moderately strong risk-based capital ratio (415%-435%), and a stock repurchase program that returned $62 million of capital to shareholders.

“Over the last several years, the combination of our steady annuity sales growth, and the outflows of legacy business has led to a meaningful shift in our business mix, away from the legacy block of higher capital-intensive business to more spread-based, less capital-intensive business,” said Brighthouse CEO Eric Steigerwalt.

Brighthouse, which provides annuity and life insurance products through layers of subsidiaries, said its new fixed annuity products launched last quarter already contributed $637 million to its total $2.9 billion in annuity sales, a 3% increase from the same quarter a year ago.

Life insurance sales up

Life insurance sales grew 26% in the first quarter compared to the first quarter of 2023, to $29 million

The adjusted loss in the first quarter, which amounted to a negative ‘$5.81 per share, was entirely related to the reinsurance premium rate increase retroactive to September 2019 and the related reserve increase from the impact of the higher premium rate over the expected life of the business.

“As with any reinsurance rate increase, we evaluate the option of recapturing the business versus accepting the price increase,” said Edward Spehar, Brighthouse’s executive vice president and chief financial officer. “In this case, we determined to accept the rate increase.”

Excluding the impact of the item, adjusted earnings were $268 million, or $4.25 per share, which was consistent with the company’s expectations for the quarter.

“While we have reduced the range of outcomes associated with movements in equity markets and interest rates, we still anticipate near-term volatility in results,” Spehar told investors in an early morning call on Thursday. “However, we believe that our strong balance sheet and robust liquidity position continue to support the consistent return of capital to shareholders.”

Brighthouse stock, which had been relatively flat over the past year, fell almost 10% in early trading Thursday, to $46.14 per share, down from a high of $53.42 in February.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at doug.bailey@innfeedback.com.

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