Brighthouse surprises with solid Q2 earnings, beating estimates

Brighthouse Financial Inc., one of the nation’s largest providers of annuities and life insurance, surprised investors a bit this week with what it said was “solid” second quarter financial results, buoyed by increased life insurance sales and some accounting wizardry.

The company reported an adjusted net income of $271 million, or $4.13 per share, (a loss of $175 million before accounting for non-recurring costs) compared with $144 million, or $1.91 per share, beating Wall Street estimates by $0.75 per share.

Charlotte-based Brighthouse, which was spun out of MetLife in 2017, said its annuities earnings were flat for the second quarter, at $291 million, reflecting higher expenses, lower fees and higher reserves. But its life insurance earnings increased 32% from the same period a year ago, to $25 million.

“Through the first half of 2023, we have seen persistent growth in our total life insurance sales,” said Brighthouse president and CEO Eric Steigerwalt. “It reflects the strong progress we have made as we execute our life insurance strategy.”

Annuity sales up 16%

Overall, annuity sales up 16% for the first six months of the year, compared with the first half of 2022.

“In addition to strong sales of our shield annuities, we also delivered strong fixed deferred annuity sales, which totaled $1.5 billion through the first half of 2023, demonstrating the complementary nature of our annuity product portfolio,” Steigerwalt said. “We intend to keep our annuity product portfolio abreast, including by expanding our product offerings over time. For example, we are currently working on a new fixed indexed annuity product which we expect to launch later this year.”

Like many of its peers, Brighthouse has been aggressively buying back its stock, repurchasing about $152 million of its common stock year-to-date through August 4.

“We continue to operate with a cautious view on both the market and economic environment,” Steigerwalt said. “As I've said in the past, we intend to maintain an active and opportunistic share repurchase program as we execute on our operational and strategic goals.”

Q2 financial highlights

Others financial highlights from the second quarter included

• Total sales equaled nearly $2.5 billion ($2.473 billion for annuities and $25 million for life insurance.
• Statutory combined total adjusted capital (TAC) of $7.6 billion
• Holding company liquid assets totaled $900 million compared to $1.1 billion at the end of March.

“The decline in holding company cash is primarily related to the timing of interest expense and subsidiary dividends during the year and our ongoing share repurchase program,” said Edward Spehar, executive vice president and chief financial officer. “We have continued to support growth in our franchise while delivering solid financial results with strong adjusted earnings and a continued robust capital and cash position since separation. And we have taken actions to lower the risk profile of our company and optimize capital. We continue to see opportunities to create long term shareholder value.”

Brighthouse has expanded rapidly since its spinoff from MetLife, with $118 billion in total investments and $85 billion in fixed maturity securities and has been dealing with industry-wide economic headwinds while maintaining a strong liquid asset position of nearly $1 billion.

The stock market met Brighthouse’s results with a somewhat negative greeting as shares fell nearly 6% in midday trading, to $51.38 per share.

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].