Brighthouse Financial execs dodge sale rumors, mixed Q1 numbers

Rumors are swirling about the potential sale of Brighthouse Financial but executives were tight-lipped during a Friday conference call with Wall Street analysts.

“We don't comment on market rumors or speculation, so I'm just going to leave it at that,” CEO Eric Steigerwalt said at the conclusion of the call.

According to a recent Semafor report, Sixth Street and Carlyle Group have submitted a joint bid for Brighthouse in what could be a $9 billion takeover bid.

Brighthouse released a mixed bag of first-quarter earnings Thursday. The insurer greatly improved its risk-based capital ratio during the quarter to between 420% and 440%.

Brighthouse struggled throughout 2024 to bring its RBC ratio up to the industry standard of 400% to 450%. RBC requirements provide for a ratio to assess the level of risk associated with an insurance company's assets. It took a $100 million infusion from the holding company for Brighthouse to finish Q4 with a 400% RBC ratio.

But Brighthouse reported a loss of $268 million in net income. The Charlotte, North Carolina-based company reported a 15% increase in corporate expenses, while annuity sales declined 21% from the year-ago quarter due to lower fixed annuity sales.

Analysts were more interested in probing the future of Brighthouse. MetLife spun off its life and annuity business into Brighthouse in 2017. Share prices began at $58 and remain at $58 today, one analyst noted, despite Brighthouse investing $2.5 billion in stock buybacks.

"Every single day we're dealing with, whether it's complexity or capital generation or sales, we're doing our jobs here," Steigerwalt said. "We've got a strategy that I think logically can produce shareholder value, and so we're just going to keep following that strategy."

Another question asked Steigerwalt for comment on recent transactions, including the partnership announced this week between Lincoln Financial and Bain Capital. Lincoln said the minority investment will support the acceleration of strategic priorities and is expected to close in the second half of 2025.

"I don't think it's my place to talk about it at all, but it's interesting, and it was opportunistic, I'm sure, on their part," Steigerwalt said. "And we look at transactions like that with an eye towards the art of the possible. Here's another transaction that we have to look at and think – what could it possibly mean for Brighthouse in the future?"

In Other News:

New hedging strategy. During the closing months of 2024, Brighthouse sealed a pair of reinsurance deals to reinsure legacy blocks of fixed annuities and universal life, and variable universal life products.

Those moves are part of a risk management strategy that continues in 2025, said Ed Spehar, chief financial officer.

“As of year-end 2024, we fully transitioned to hedging new business for our Shield product suite on a standalone basis,” he explained. “We continue to develop a separate hedging strategy for our variable annuity and first-generation Shield annuity block of business. We expect to complete the transition to this revised strategy for this legacy block of business before year-end.”

Quarterly Snapshot:

• Adjusted earnings for the quarter reflect a $10 million unfavorable notable item, related to an actuarial model refinement.
• Corporate expenses in the quarter were $239 million, up from $207 million in the first quarter of 2024 and $210 million in the fourth quarter of 2024. “We expect corporate expenses to normalize the remainder of 2025,” Steigerwalt said.
• Holding company liquid assets of $1 billion
• The Run-off segment had an adjusted loss of $64 million in the first quarter, compared with an adjusted loss of $341 million in the first quarter of 2024

Management Perspective:

“We’ve been able to grow everywhere we want to. ...I have never once, I'm staring at Myles [Lambert, chief distribution and marketing officer] here, told him, ‘You can't sell.’ He's unconstrained. But we are going to run this company for profitable growth.”

–  CEO Eric Steigerwalt

By The Numbers:

• Total Revenue: $2.4 billion ($74 million in Q1 2024)
• Net Income: -$268 million (-$493 million in Q1 2024)
• Earnings Per Share: Adjusted earnings, less notable items of $4.17 ($4.25 in Q1 2024)
• Share Repurchases: $59 million
• Stock Price Movement: Shares up 2.4% to 59.26 by midday Friday

Life Picture:

- Adjusted Earnings: $9 million (-$36 million in Q1 2024)

- Sales: $36 million ($29 million in Q1 2024)

Annuity Picture:

- Adjusted Earnings: $314 million ($313 million in Q1 2024)

- Sales: $2.26 billion ($2.87 billion in Q1 2024)

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.