Brighthouse Flicks On The Switch – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Life Insurance News
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Annuity News
Life Insurance News RSS Get our newsletter
Order Prints
August 16, 2017 Life Insurance News No comments
Share
Share
Tweet
Email

Brighthouse Flicks On The Switch

By Cyril Tuohy InsuranceNewsNet

Brighthouse Financial, the newest major life and annuity distributor in the U.S., moved quickly to expand its product line in time for its spinoff from MetLife earlier this month.

But has it moved quickly enough?

So far, it’s been a tough start for Brighthouse, which began regular-way trading on Aug. 7.

Related stories

  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity

The stock is off 12 percent from the “when-issued price,” KBW analyst Ryan Krueger said in an Aug. 11 podcast with clients.

He gave a number of reasons for the lag in stock price. They include a business mix that is heavy on variable annuities, no capital return expected until 2020, cash flow sensitivity to capital markets, a life business that is sensitive to runoff interest rates, and below-average return on equity.

Net income and cash flow generation are expected to “meaningfully lag” the company’s definition of operating earnings per share in the next few years as well, Krueger said.

It’s still early days in the life of the company, of course, and no one doubts the company has a solid business plan to secure future growth.

Going Their Separate Ways

Almost overnight, Brighthouse became one of the largest annuity distributors in the country following its separation from MetLife. The new company is backed by $219 billion in assets and is the owner of 2.7 million insurance policies and annuity contracts.

By contrast, MetLife charted an almost opposite story since the Brighthouse spinoff, according to Krueger.

MetLife has become a simpler company.

MetLife’s sensitivity to capital markets has declined, its cash flows appear more robust, its capital returns are expanding through lower expenses, and its “separation-related surprises” are fading into the rearview mirror, Krueger said.

Analysts and competitors are keeping close tabs on Brighthouse as the company takes flight on the wings of independence. What does all this mean for the new company?

Turning Up the Lights

Brighthouse's president and CEO, Eric Steigerwalt, led the company through 18 months of transition. Brighthouse acted decisively to capitalize on market trends.

On Monday, the company announced the launch of a pair of new index-linked, or buffered annuities, called Shield Level Select. This is a single premium deferred annuity with no annual fee.

The buffered annuity products, a hybrid between a variable annuity and a traditional fixed indexed annuity, include a death benefit but don’t come with income riders.

Simplicity is part of a market trend, Novarica consultants Chris Eberly and Harry Huberty wrote this month in a report on the annuity market.

Brighthouse also launched a new fee-based version of the index-linked annuity cousin – Shield Level Select Access Annuity. This product gives financial advisors the option of selling a fee-based version of the Shield Level Select family.

Shield Level Select targets a growing segment of the annuity market known as structured or buffered annuities. This segment is a rare bright spot in a turbulent annuity market that has seen variable annuity sales slump 21 percent in 2016 over 2015.

The Shield Level Select announcements followed on the heels of the July update to the company’s Premier Accumulator Universal Life (PAUL) product.

In May, when Brighthouse was still part of MetLife, the company launched Shield Level 10 annuity, an index-linked single premium deferred annuity distributed by Wells Fargo Advisors.

Shield products offer “market participation and protection,” Myles Lambert, chief distribution and marketing officer for Brighthouse Financial, said in a news release.

Laying Down an Early Marker

Expansion of the Shield line indicates that Steigerwalt and his lieutenants are prepared to lay down an early marker in Brighthouse Financial’s battle with other competitors in the buffered annuity market: Allianz Life and Axa.

Second-quarter sales of Shield portfolio products, meanwhile, rose 28 percent to $570 million compared with the year ago period, the company reported.

Brighthouse said it sold more than $1 billion worth of Shield annuities in the first half of this year. There’s every reason to believe company will want to grow that income stream.

Some insurers like buffered annuities because they don’t require the same reserving levels as traditional variable annuities. Buffered annuities also diversify an insurance company’s risks at a time when interest rates remain low.

Buffered annuities expose policyholders to losses beyond a protection buffer, or shield, offered by the insurer in exchange for higher participation in market gains.

Compared with traditional variable annuities, buffered annuities stick with index allocations, stay away from subaccounts, drop lifetime income riders and commit investors to shorter terms.

Burnishing the Shield

Shield Level Select comes in two flavors, one with a three-year surrender charge and another with a six-year surrender charge.

Surrender charges penalize the annuity holder for canceling the contract before a certain date. This allows the insurer to recoup the commissions paid upfront to advisors.

Analysts expect companies to issue more shorter-term surrender products as longer surrender charge products become harder to justify under a new fiduciary era.

Shield Level Select 3-Year Annuity levies a surrender charge of 6 percent in the first year, 6 percent in the second year and 5 percent in the third year, Brighthouse said.

Shield Level Select 6-Year Annuity charges 7 percent in the first year, 7 percent in the second year, 6 percent in the third year, 5 percent in the fourth year, 4 percent in the fifth year and 3 percent in the sixth year.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
© Entire contents copyright 2017 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

Master Your Sales Persona To Deliver A Memorable Sales Experience

Newer

Here’s What to Expect if You Sell Annuities

Advisor News

  • For some, nothing to fear from taking RMDs, professor says
  • Half of investors plan to work after retirement
  • Cetera to acquire Securian’s retail wealth business
  • Study: Education level should drive decisions on Social Security, annuities
  • Former California energy company exec given 5 years in prison for $15M investment fraud
More Advisor News

Annuity News

  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
  • Producers stew as insurers slow to process life and annuity applications
  • Substitute teacher wins massive lottery drawing in North Carolina. ‘Too good to be true’
  • Brad Rhodes: An annuity product many have never heard of
More Annuity News

Health/Employee Benefits News

  • Nearly half of all gig workers have no access to health insurance
  • California offers health insurance for $10 a month. The deadline is days away
  • Amazon announces service to deliver medications to your door. Here’s how it works
  • COVID-19Another COVID ‘new normal’: more Californians dying at home
  • Seven sentenced in conspiracy to defraud federal health insurance programs
More Health/Employee Benefits News

Property and Casualty News

  • Jim Donelon: Affordable, accessible insurance is mission critical
  • Moody’s estimates $5B-$7B in losses from California flooding
  • Entergy customers get $1.4 billion bill for Hurricane Ida grid damage
  • Economic conditions blamed as insurance agency M&A dips in 2021
  • Santa Barbara County estimates $150M in storm damages to public infrastructure
Sponsor
More Property and Casualty News
The time is 09:56:49pm test

- Presented By -

Top Read Stories

  • A Louisiana employer's health perks helped their workers lose weight. Here’s how.
  • US debt ceiling limit reached; Social Security, Medicare targeted
  • Former CEO of Texas beverage company sentenced to 10 years in prison for fraud
  • LETTER: FEMA flood insurance is all but worthless
  • Progressive online practices set example for agents, other carriers
More Top Read Stories >

FEATURED OFFERS

Grow life insurance sales in 2023 with middle-market clients

Tap a new source for sales and referrals with Allianz Life Insurance Company of North America.

Don't Miss ICMG 2023

When the success of your business depends on making the right connections, ICMG is the place to be.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.