8-K: Brighthouse Financial Reports First Quarter 2025 Results: Annuity Sales Strong, Despite Net Loss

Brighthouse Financial announced its first quarter 2025 results, highlighting strong annuity sales but reporting a net loss available to shareholders.

Summary

• Brighthouse Financial reported a net loss available to shareholders of $294 million, or $5.04 per diluted share, for the first quarter of 2025.
• This compares to a net loss of $519 million, or $8.22 per diluted share, in the first quarter of 2024.
• Adjusted earnings, less notable items, were $245 million, or $4.17 per diluted share.
• Annuity sales totaled $2.3 billion, including $2.0 billion in Shield Level Annuities.
• Life sales reached $36 million.
• The company repurchased $85 million of its common stock year-to-date through May 6, 2025.
• The estimated combined risk-based capital (RBC) ratio is between 420% and 440%.
• Holding company liquid assets stand at $1.0 billion.
• Corporate expenses in the quarter were $239 million.
• Book value per common share was $61.17, or $141.87 excluding AOCI.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there's a net loss, strong annuity sales and a healthy RBC ratio provide some optimism. The management's positive comments also contribute to this assessment.

Positives

• Annuity sales, particularly Shield Level Annuities, remain strong at $2.3 billion and $2.0 billion respectively.
• Life sales show steady growth, reaching $36 million.
• The company maintains a robust level of holding company liquid assets at $1.0 billion.
• The estimated combined RBC ratio is within the target range, between 420% and 440%.
• The company repurchased $85 million of its common stock year-to-date through May 6, 2025.

Negatives

• The company reported a net loss available to shareholders of $294 million, or $5.04 per diluted share.
• Corporate expenses increased to $239 million.
• Annuity sales decreased 21% quarter-over-quarter, primarily driven by lower sales of fixed annuities.

Risks

• The company anticipates volatility in net income (loss) due to differences between its hedge target and GAAP reserves.
• Changes in accounting standards could have a material adverse effect.
• Downgrades in financial strength or credit ratings could negatively impact the business.
• Adverse capital and credit market conditions could impact liquidity and access to capital.
• Cybersecurity failures could lead to loss of confidential information and damage to reputation.

Future Outlook

The company anticipates volatility in net income (loss) given the differences between its hedge target and GAAP reserves, which are impacted by market performance.

Management Comments

• Brighthouse Financials estimated combined RBC ratio as of the end of the quarter was within our target range, and we maintained a robust level of holding company liquid assets, said Eric Steigerwalt, president and CEO, Brighthouse Financial.
• Overall, we produced solid results in the quarter, including growing sales of our flagship Shield Level Annuities Product Suite, which increased 5% quarter-over-quarter and 3% sequentially.

Industry Context

Brighthouse Financial operates in the competitive annuities and life insurance market, facing challenges from other large providers and the broader economic environment. The focus on Shield Level Annuities reflects a strategy to capture demand for structured products.

Comparison to Industry Standards

• Comparing Brighthouse Financial's RBC ratio to peers like Prudential Financial (PRU) and MetLife (MET) shows its capital position is within a competitive range.
• The annuity sales figures are strong compared to the industry average, particularly in the structured annuity segment, where companies like Lincoln National (LNC) also compete.
• However, the net loss highlights the challenges in managing market volatility and hedging strategies, an issue faced by many insurers with significant variable annuity businesses.

Stakeholder Impact

• Shareholders will be concerned about the net loss, but reassured by the stock repurchase program and strong annuity sales.
• Employees may be affected by cost-cutting measures if the company seeks to improve profitability.
• Customers may be impacted by changes in product offerings or pricing strategies.
• Creditors will monitor the company's financial strength and ability to meet its obligations.

Next Steps

• The company will hold a conference call on May 9, 2025, to discuss the results.
• Investors are encouraged to review the information shared on the Brighthouse Financial investor relations website.

Key Dates

Keywords

Brighthouse Financial, financial results, annuities, life insurance, RBC ratio, earnings, stock repurchase, net loss