8-K: Brighthouse Financial Reports Strong Fourth Quarter and Full Year 2024 Results, Driven by Annuity and Life Sales

Brighthouse Financial announces positive Q4 and full year 2024 results, highlighted by a strong RBC ratio and significant stock repurchases.

Summary

• Brighthouse Financial reported a net income available to shareholders of $646 million, or $10.79 per diluted share, for the fourth quarter of 2024, compared to a net loss of $942 million in the fourth quarter of 2023.
• Adjusted earnings for the fourth quarter were $304 million, or $5.07 per diluted share, compared to $177 million, or $2.73 per diluted share, in the fourth quarter of 2023.
• Full year 2024 net income available to shareholders was $286 million, or $4.64 per diluted share, compared to a net loss of $1,214 million in 2023.
• Full year 2024 adjusted earnings, less notable items, were $1,209 million, or $19.63 per diluted share, compared with $930 million, or $13.99 per diluted share, in 2023.
• The company's estimated combined risk-based capital (RBC) ratio was approximately 400% at year-end, reflecting a $100 million capital contribution to Brighthouse Life Insurance Company (BLIC).
• Holding company liquid assets were $1.1 billion, or $1.0 billion pro forma for the capital contribution to BLIC.
• The company repurchased $250 million of its common stock in full year 2024, reducing shares outstanding by approximately 8% relative to year-end 2023.
• Annuity sales for full year 2024 totaled $10.0 billion, driven by record sales of Shield Level Annuities.
• Record life sales for full year 2024 reached $120 million, driven by sales of Brighthouse SmartCare.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic initiatives, and shareholder returns. While acknowledging potential risks, the overall tone is optimistic and confident.

Positives

• Significant increase in net income and adjusted earnings compared to the previous year.
• Strong RBC ratio indicates a solid capital position.
• Substantial stock repurchases demonstrate confidence in the company's value.
• Record annuity and life sales indicate strong product demand.
• Corporate expenses decreased by 7% over 2023.

Negatives

• Annuity sales decreased 18% quarter-over-quarter.
• The company anticipates volatility in net income (loss) given the differences between its hedge target and GAAP reserves, which are impacted by market performance.
• Adjusted earnings for the quarter reflect a $48 million unfavorable notable item, or $0.80 per diluted share, related to actuarial model updates.

Risks

• Volatility in net income due to differences between hedge targets and GAAP reserves.
• Potential impact of market performance on GAAP reserves.
• Impact of interest rates on future ULSG policyholder obligations and net income volatility.
• The potential material adverse effect of changes in accounting standards, practices or policies applicable to us, including changes in the accounting for long-duration contracts.
• The risks associated with climate change.
• The adverse impact of public health crises, extreme mortality events or similar occurrences on our business and the economy in general.
• The impact of adverse capital and credit market conditions, including with respect to our ability to meet liquidity needs and access capital.
• The impact of economic conditions in the capital markets and the U.S. and global economy, as well as geopolitical events, military actions or catastrophic events, on our profitability measures as well as our investment portfolio, including on realized and unrealized losses and impairments, net investment spread and net investment income.

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

• Eric Steigerwalt, president and CEO, stated that the company continued to make progress on its capital-focused strategic initiatives, including completing a reinsurance transaction and fully transitioning to hedging all new business for the Shield Level Annuities Product Suite on a standalone basis.
• Steigerwalt also noted progress toward the execution of the company's focused strategy in 2024, including reduced corporate expenses, record sales of Shield Level Annuities and Brighthouse SmartCare, and stock repurchases.

Industry Context

Brighthouse Financial's focus on annuities and life insurance products aligns with the broader trend of individuals seeking financial security and retirement solutions. The company's emphasis on Shield Level Annuities reflects the growing demand for structured products that offer downside protection with upside potential. The reinsurance transaction and hedging strategies are consistent with industry practices for managing risk and capital.

Comparison to Industry Standards

• A combined RBC ratio of approximately 400% is generally considered a strong capital position within the insurance industry, indicating the company's ability to meet its obligations.
• Stock repurchases are a common method for returning capital to shareholders, and Brighthouse Financial's $250 million repurchase program is comparable to those of other large insurance companies.
• The growth in annuity and life sales reflects the company's ability to compete effectively in its target markets.
• Companies like Prudential Financial, Lincoln National, and MetLife are comparible companies in the life insurance and annuity space.

Stakeholder Impact

• Shareholders benefit from increased net income, stock repurchases, and a strong capital position.
• Policyholders are supported by the company's financial strength and risk management practices.
• Employees are part of a company with a focused strategy and positive momentum.

Next Steps

• The company will hold a conference call on February 12, 2025, to discuss the financial results.

Key Dates