Brighthouse Financial Inc., one of nation’s the largest sellers of annuities and life insurance, reported a net loss of $525 million in the first quarter of 2023, compared with net income of $1.5 billion in first quarter of 2022, blaming the collapse on market conditions and declining hedging values. Total revenue for the quarter fell more than 36%, to $1.28 billion.
Company executives discussing Brighthouse earnings noted that the first quarter generally brings a seasonally high mortality rate, but this year was above normal.
“We had more claims than normal, above the usual $400 to $500 million for the quarter,” said Chief Financial Officer Edward Spehar. “So, from the claims standpoint and reinsurance standpoint, it was worse than a typical quarter.”
Lower ‘run-off’ cited in Brighthouse earnings drop
The company also experienced lower “run-off,” which is a measure of ongoing premiums as a source to pay claims. Its run-off totaled $106 million in the first quarter compared with $236 million in the fourth quarter of 2022.
But executives pointed to big gains in annuity sales, which were up 35% for the quarter over last year, and life insurance, which rose 15% to $23 million, as signs the company is well-prepared to weather ongoing uncertain market conditions.
”We plan to introduce a new life insurance product later this year, which we expect will further diversify and strengthen our life product suite,” said Eric Steigerwalt, Brighthouse Financial’s CEO. “As we execute on our business strategy, we remain diligent in our financial and risk management. maintaining balance sheet strength is imperative in order to support our distribution franchise.”
Execs say strong results delivered
Despite quarterly loss, Steigerwalt said the company delivered strong results and a combined risk-based capital ratio between 460% and 48%, well above its targeted range of 400-450%. He also noted Brighthouse sits on a “robust cash position,” with $1.1 billion of holding company liquid assets.
Brighthouse has been busy buying back its shares to boost its value and maintain a commitment to return capital to shareholders. It repurchased about $62 million of its common stock in the first quarter and an additional $27 million repurchased though May 5, reducing the number of shares outstanding by 44%.
“While we have reduced the level of buybacks to reflect a cautious view on both the market and economic environment, we intend to maintain an active and opportunistic share repurchase program,” Steigerwalt said.
Brighthouse stock, which traded in the 50s in March, has fallen more than 18% this year. In midday trading Tuesday, shares were down 4%, to $41.57 per share.
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at firstname.lastname@example.org.
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