BHF - Earnings call transcript Q3 2020 | Brighthouse Financial, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Brighthouse Financial’s Third Quarter 2020 Earnings Conference Call. My name is Sonia and I will be your coordinator today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session towards the end of the conference call. In fairness to all participants, please limit yourself to one question and one follow-up.

conference recorded the replay reminder, a is for being purposes. As from ask session speakerphones call. that we using portion you the question-and-answer Also, the refrain cellphones, during or of headsets David turn presentation to Relations. like now of Investor would over I to Rosenbaum, Head the Mr. Rosenbaum, you may proceed.

David Rosenbaum

for you XXXX Brighthouse Financial’s thank earnings and third call. morning joining Good quarter

and these at financial review Our on section Relations the and released brighthousefinancial.com. encourage to night will to our from and materials, refer Officer. prepared remarks. supplement website Ed Eric President you in We will slide presentation Financial release, of and we earnings presentation and the last our all Investor of our Officer; were slide can Today, accessed hear Chief our Chief Spehar, be you Executive Steigerwalt,

comments, a Chief will and up are us we Chief here with Myles call the Marketing Investment question-and-answer Murphy, Officer. Operating and to Distribution Also Officer; prepared participate the for today open Conor Lambert, Officer; Following in discussions Rosenthal, period. our John Chief

Our federal securities will discussion a the risks with any information November discussed Information only described the Securities as no to differ update from X, undertakes Financial's statements results actual obligation anticipated Brighthouse the meaning Brighthouse materially Financial's of forward-looking and include within XXXX. may today's the of in during as on call time-to-time in forward-looking call. the filings and Commission. laws. today, of results on statements result this Exchange from U.S. uncertainties discussed speaks The call company today's

the due the non-GAAP Reconciliations on to directly call on Relations our by Generally statutory to known Principles, by now, GAAP finally, discussing a earnings financial filing the of statutory on are Eric measures may measures used preliminary based timing to the or Investor website, turn be historical And that we used measures and base in release, as of statements. management including management over basis are references also be call, found the supplement. our not related of results Accounting of our will these certain to the presentation this CEO, financial slide non-GAAP statutory And certain portion measures. comparable most I'll During definitions Steigerwalt. Accepted measures

Eric Steigerwalt

Thank good everyone that are loved listening I safe you, and morning, everyone. and David, and hope ones today well. remaining your

quarter discussing the Before tremendous for our their our these I to and during results recognize focus from once XXXX, third again want of challenging dedication times. very employees

people achieve increased pandemic retirement. both the mission their security retirement COVID-XX already to As continues help people for ever. is Due Financial's pandemic, to across the many Brighthouse to U.S. planning financial financial the and in are those critical than those evolve, future, facing about more uncertainty

the I've our customers delivering by before, our despite we and remain As the partners, said pandemic, strategy for our on created on shareholders. our and focused challenges

climate the focused entered position a strength confident we current and strategy. Importantly, of remain from in our

and strong is and remains portfolio quality sheet balance and well-diversified. Our liquidity high our investment

Before repurchase turning like update quarter, to share an results on our I'd to program. give this our

since the of will this our As million in common common of first This have of our $XXX public from XXth. authorization I program repurchased of initial announcement represents total August on our previously of on company disclosed, have time the our stock August completion Reflecting November repurchases repurchase our we Xth we a repurchase very became our pleased share current stock of through than approximately the stock $X.X resumed common our XXXX, year. of after expectations. of repurchased and shares a authorization, of more of outstanding of stock. we significantly repurchase billion reduction am the ahead XX% that we independent an

authorizations, and that capital as flexibility a well to that With said, share the achieve. continue have we we before, said would prudence we of repurchase our will to $X.X target. have billion I as return emphasize As target regarding completion like future

third So to me quarter let turn results. now,

Our for summarized earnings on are of presentation. Slide our X the quarter key highlights

to continue prudently we statutory manage First, our capitalization.

Our hedging of program performed as XXXX. the third expected in quarter

Importantly, of provide RBC more was or XXX% risk-based in ratio Ed we statutory the will range XXX%. estimate capital to details shortly. combined results that our on

we quarter, the sequentially. up were billion, Second, of challenging sales the XX% approximately environment. sales Annuity had $X.X XXXX, a strong and up quarter with compared XX% despite third

as of Additionally, in we XXXX. sales quarter with we generated approximately very have insurance to life progress on I'm strategy. pleased our execute of life third made $XX the we that continue this insurance million

strong market quarter turn Third, policies. the as me as annuity $XXX the by well contract total continued sales, as to surrendered fewer inflows, driven environment, net million in let which were holders

we’ve million were previously, which we as business the coupled expenses the a expenses, capital-intensive to generating to end flow on time, mix profile by of the expect rate corporate run new shift we see add not less over We business, our Four with year. continued business. third committed less in million As said cash $XXX of do $XXX runoff reducing and profitable corporate establishment include a this more costs, remain basis by quarter. in

investments we and our Finally, necessary infrastructure make in technology to continue business. in our

know, as the establishment costs. investments to we third refer In establishment million approximately tax. were quarter, you As before $XX costs these

in our our are better we of their strong. and the we wrap will with contract well couple distributors, how systems support final providing As and holders. our up, These exits. through sheet being our years are one professionals, as as we expected invest believe positions to associated infrastructure, our future platform. step balance liquidity TSA policyholders I’ve managing us we and said in put before, of goal And financial state to are operating and continue closer exits our of To our transitions TSA to prudent way importantly,

to the I'll believe We over our right believe strategy. the discuss in With we shareholder long-term execution And Ed value. strategy have to it that, results. continue continue place that to well-positioned to deliver we financial turn are to we our Ed? of

Ed Spehar

night, third Last reported statutory we morning, quarter earnings, everyone. preliminary with good and Eric, you, along Thank results.

which strong position, of focus a liquidity we prudence function our results have is flexibility. these As on and a illustrate, capital and maintained

Turning September as XXth. our capital to adjusted $X.X statutory combined metrics, billion to statutory or key increased total TAC

or RBC estimated reflects ratio approximately of XXX%. impact the in a the actuarial combined capital of And strong continued million The loss annual the metrics risk-based to we Our our to a in had markets improvement XXX% range and $XXX quarter, the normalized increased statutory the capital quarter. equity in of review.

on some quarter. discussing Before to the would performance time drivers, in current actuarial completed period review like I spend the

but As we impact assumptions, the was of interest a part statutory this different directions. The risk-based capital as results markets an statutory GAAP on review, of There review, result XX benefit points ratio. and was examine including long-term both rates. impact a on and approximately capital of our in XXXX

variable We have the annuity assumptions VA we continued to adopted at align or better and to of refine with reform, end XXXX. which our models

reflected needed During than respect we this process, we be to more been that how we to assets VA. determined with conservative we backing invested had

assets not Specifically, VA the benefit driver total from mean X.XX% reversion total of requirement. market a GAAP XX-year charge reflected total was support driven on GAAP a current asset billion in fully yields in issue A levels, update. for X.X%. yields the this with treasury those a VA from reduction the reform the by $XXX invested that calculation the statutory assumption averaged rate the to with were revision billion capital our and of requirement long-term have basis, align to $X.X was net above the model $X.X a the million income impact On assumed asset

of We the driver. continue impact no block of split on universal with balance in being life the related over rate number to XX statutory updates rate guarantees, the The different mean related items, between a our secondary was reversion runoff results. charge to had was GAAP charge reversion The that VA. and of mortality assume largest mean occurs interest years. The change with

of Turning The had million. $X.X equity to actuarial $X.X our conservatively portfolio we favorable caused quarter, both and increased XX-year level and results, gains returns market, the political substantial rate Overall, from the a loss in economic markets a and Despite increase uncertainty. by $XXX the driven by XXth, normalized June September modest statutory we quarter hedge of loss rate, unwind billion interest positioned interest market an was in the for elevated our increase derivatives. driven equities believe at of we unrealized given third in was This rates, approximately are XXth. which review. the the the third at to billion swap TAC in

focus to in the the have business. to normal the favorable the continue a combined reminder, on of statutory estimated current is loss XXX% by the dividends. XXX% from Our billion range RBC more and uncertain ratio release to on emphasis comments, well range XXX% a as we release of close statutory impact as to $X.X normalized In above offset related place I'd which than environment, our to heavy RBC year-to-date, my of quarter To the review. VA like actuarial our statutory markets. was increased XXX% the ratio, capital capital we generated In target to in

a First, early allowing for This capital. our risk of VA to billion year, lower $X this hedging release contributed we revision profile, strategy. the revised of

Second, our this additional part $XXX reform, million we as approximately to capital in by of released align models removing year's review. of excess actuarial conservatism better VA with

or fourth England billion $XX Given our ordinary to $XXX BLIC, from a Insurance Life Brighthouse Company, we ordinary remaining our from $X.XX million intend New as quarter, well position, dividend strong the NELICO. in Company planned Insurance of million the dividend capital take as or Life

our Update this As in we Call early is a March. consistent with plan that communicated Business reminder, the on

is times Moving the We at annual a environment. cash ended with is $X.X appropriate the position have billion, to which it roughly conservative the with holding fixed to and in quarter third company the we quarter of second the charges. X holding current believe company, approximately consistent

billion. by the of at quarter, themes. establishment after-tax quarter of night, four Corporate The which review; adjusted Last in million were: third on impact XXXX items third in There notable quarter XXXX. $X.X the adjusted with look Moving earnings, items of we $XXX items & of and underlying we second included adjusted Other. When an compares $XXX excluding third the $XX a million in from there from earnings same are basis costs of notable $X.X the the in $XX million, charge actuarial notable on notable two lowered to which reported items, and approximately basis quarter million less quarter adjusted the billion were earnings. adjusted earnings earnings

strong, the First, alternative our driven X.X% investment quarter. the in yield market second third performance alternative as in by the quarter, favorable were returns was investment

XXth. alternative Our September yield was investment through year-to-date X.X%

$X.XX separate the Second, above returns approximately account assumed our This a quarter. X% and share contributed results. per normal above quarter's return were in was well

million Net level. margin modest. normal which The lower a expenses below million fourth $XX from the second slightly remained expenses than claims in is than the final than was lower from which COVID-XX our down were pre-tax claims and was quarter. third modestly $XXX approximately lower Corporate second and expected. quarter, underwriting the Third, were quarter, were theme, normal a as COVID million $XX in quarter

million runoff were segment driven earnings DAC $XX a partially & the The income, partially offset adjusted income, taxes, were by stock items, lower higher in by with offset higher driven Other were excluding adjusted million notable in and margin. earnings segment had lower $XX higher were investment notable fees of investment by million. amortization. were adjusted DAC preferred results net net excluding excluding underwriting Turning Sequentially, level. to items results quarter. million the at along of Sequentially, reported notable higher earnings, dividends. the adjusted Annuities results reflect earnings by and quarter. amortization, higher higher Sequentially, lower $XX lower offset items higher $XXX results partially the Corporate loss, income, Life quarter. notable by partially by Sequentially, investment impacted expenses. an by in items adjusted offset excluding net expenses

that, the I full Before excess financial protect sheet priority that company, franchise to With turn quarter I order believe want validate balance our and your at in liquidity emphasize strength and continued third highlights the the emphasis holding like of uncertain the to in the our cycle position end capital that at I for on business have the operator distribution we our top remains conclude, and prudence we'd current our cash to flexibility call a over questions. and to environment. strong model.

Operator

Thank you. Instructions]. [Operator

question first Research. Bass Erik from of Our Autonomous comes

Erik Bass

you'll received block in-force evaluate We market. up recently you've that consistently for of that transaction that your saw know a execute well freed reinsurance was And and capital GMIB one an the I liabilities transactions broad significant by Venerable competitors any But that type sense. you deal and interest make closed? the for just transfer is the of the in just bid-ask is VA there suggests the that wondering, And opening risk have? spread market is that up said

Eric Steigerwalt

Erik, Eric. Good it's morning,

Here's what I would say.

have repurchase all pursue unlock We're for business. new strategy a rationalize to and to of strategy, this as including And and we'll quarter, that capital, on us, see, First of continue sell in stock, you we've expenses that. doing all, that strategy. have had been we executing

over Now is be transaction at transaction. there said some obviously it market executable. From pretty a and a a and I've was over, could if, adds like value big perspective, point, this

if not, has materially has out not or just I know, the there. strategy our continue the market changed don't I I So going stance say can changed. sentences laid but We're to that in two whether

that that's what I transaction, someday may include say. And a would

is well. Ed as to think I going jump in

Ed Spehar

good morning. Yes. Erik, Thanks.

view position. capital acceptance our this own capital potential our company the markets every of by a of risk, does strategy. has its strategy block First, deal. strong the is impact of strategy and prudent supported a attractiveness And And cash financial

releasing we block have business, substantial from our are a we transaction. focused Second, capital and on without VA capital released VA from

roughly as reminder, of release a third earlier quarter, year of over our of So refinement than models, hedging an every certainly you us shares we're which $X VA reform, with as of VA that years. as In billion the in-force our past able our quarter And attrition the release common a VA this of is capital. post approximately result led actions were a more just capital. take of together, of that's And repurchase additional strategy, million revised again, two of these to also, this we a when benefactor a all natural the $XXX allowed to to XX% derisk block. strategy result our derisking was

Erik Bass

drivers to about And earnings if the adjusted more and then movements. could statutory you sensitive your market maybe pretty a Ed bit talk continue to of this little be

just positive items you about help negative can variances create or can key the think So us there? that

Ed Spehar

don’t loss a $XXX million about the quarter. I why I statutory you as quarterly So talk Well, things. Sure. normalized think results? the I'd two say we had know, in

we First, economic level of We portfolio a today. and are hedge significant positioned conservatively the in see do political uncertainty. market

an So I overarching would that's make. just comment

the some stat Specifically was in portfolio norm the by, the would I and liability. risk our derivatives driven basis between loss quarter, say,

the interest only versus So basis our that treasury when we saw which look in XX-year XX in derivatives. a to think movements And the in swap increase derivative rate, which go what basis our continue the in book, relevant for XX-year at protection market point rate the relevant gains you increase point our total rate And as most X is that the was about substantial yield, out money the rates and variable of substantial previously annuity is in in have lower. requirement. to kept just interest rate we derivatives, we've asset were a unrealized place event reminder, a rate

Operator

Dowling question comes next Humphrey & Lee our Partners. of And from

Humphrey Lee

have Just about So holding capacity, company well? we considering capital as you moment how maybe how but dividend at ahead time, but lot a look XXXX, at a little the the your should premature about for as you given think that? we capital position now, think your same do of

Ed Spehar

Hey, good Humphrey. morning,

things. So of a couple

we First targeted remaining Brighthouse the of all, Insurance plan we as to quarter, had the for dividend or that's $XXX Company fourth Life said, that million. in BLIC take we

pre-COVID. had So, full which number for March in business take $XX If million billion from we to at from update, -- we'll the taken plan so a on look year, have the you is to also our line dividend $X.XX we with NELICO. communicated that about BLIC, we

BLIC to that third fourth might end unassigned the I'll we in we've billion not next the improved what year, funds billion I'm $X.X tell going So at preview quarter. to taking If quarter. $X.X about at look to approximately that be of you do. we're our the got we dividend going to here

on plenty there's the of So quarter. capacity based third

However, the a obviously, not of what is. we number It's considering decide factors. on number funds our clearly dividend unassigned just

Humphrey Lee

how improvement. Just improvement just much appears I efficiency? trending how that looking gaining million additional million actual relative we be at should XXXX? $XX corporate think have guess of is about of of or expenses, target to you $XXX it kind kind kind then that in of pandemic-related been your of And your favorably to

Eric Steigerwalt

target. Hey, Humphrey, it's Yes, there. against million well some is $XXX There we're doing in Eric.

you little be think that do the the real getting are from answer are certainly the you year. are sure last for travel Travel -- no. I are estate quarter, asked, is experiencing help And and companies rest I'm But down we will got to of I other and savings? for any a as well. well instance, some costs

have for target I'd as our We a finish we that out hit We'll target. to it you know. planning. like about generally look, as talk 'XX, And

we'll quarterly talk sure next the it I'm about So on call.

thing is, that work, pretty go here. we might right our through doing. are I there as say of the think now. can offset sort make. Now, And to want We've That's the are we I only maybe investments only opportunities some see the of you sales might planning some how got good

So to that's only real add anything? Ed, you do want the possibility.

Ed Spehar

would. I Yes,

on the get just expense So might a run add anticipating question little and maybe we to a rate. about

$X.XX The So performance, strong our to markets. in ex also biggest as adjustment, adjusted would some you the reported notable items and quarter. benefit we related I'm from can alt’s of appreciate, be sure earnings

would what normal So, this quarter also two level. those adjust more another on in items. as total there's $X being that about for, you for probably have thought of about expenses But relative $X.XX probably favorable out just we about that take to I in a

basis. And all expenses about of you're is, here in about $X rate round if the EPS, So, putting these quarter. quarterly share favorability together, run about number talking in on you third bottom-line did thinking have a a you're

Operator

Fargo. next comes of from Wells question our And Greenspan Elyse

Elyse Greenspan

on quarter. within in -- little get hoping sales the first the I was annuities that My bit the a your color question, more to sales

did strong Shield some still annuity growth again. sales fixed are Your sequentially. show pretty

just should sales So on in this have color we versus environment forward? how think about and any trended how going that expectations

Myles Lambert

Happy question. It's that take sure. to Yes, Good morning. Myles.

remain the incredibly as pleased, quarter. it we So results our for pertains sales to

As best a Eric sales, our mentioned, did as billion quarter we about yet which is company. of annuity publicly traded $X.X

their with in our solid we're our results pleased product see growth Flex Shield to Access Shield to sales. rate the well fixed the continue want pivoted our continue our And teams with We advisors as sales and our really this on to add category. with well as -- or of product? have to And seeing our the in the Conor, support team anything that we're best FRA if Shield quite in the environment you product and ability. both

Conor Murphy

Yes, let do that. me

benefit. for Just everybody's

have rate So is and annuities, -- follow XX% been fixed the VAs are our product. And expense and which in us. a we with offer few increase reinsurance to fixed deferred annuities, products. are fixed is reporting core products perspective, buffered QX a from of strategy, to a the indexed our customers do that We alongside have the we fixed specifically annuities. our on a suite base. And competitive select up we've [Lumber] industry a of space firms year-over-year. on agreement an for focused reentered both we been and And place looking is lower beneficial Myles with

So yes, of decent quarter. in it the amount volume was a

Elyse Greenspan

just front? the highlighted the think target some timing evenly updated just there any throughout be to about XXXX, then from we buyback on now then given BLIC second level on should and of quarters we think of think of spread As guys fourth have kind or your That's and taking uncertain just to helpful. the is you’ll NELICO work conservatism from also environment? trying view you towards the question, And my pointed the we capital, relative to is you the of kind to conservatism, in as of the plan end dividend as that about quarter, buyback capital your

Eric Steigerwalt

to it's Elyse, bit, would see the like are changes return it's buying don't out expect want and $X.X math, We're as okay? level ahead And Eric. if at going like be But to a got this -- know, I'd at we'd here our got authorization, $X.X hit near to on great, now a a the of we've continue. as Hi, before, billion. company. but of is you to capital up run Board which our holding pace there, target point, look, sure hit is back this to here, cash the level. look, your and that We've I at average so daily, heading XXXX. billion basis. have But Yes, environment, some have at the we're we've a that reasonable the year of can do sort obviously, of which which conversation get a the to it. getting Obviously, to you it'll I've a is lot full daily strategy said a got I in look, the money to now, stock we soon, out make flexibility part But We'll end of little holding need. of the levels we you of eventually company, lot the into the Board

the macroeconomic knows, strategy of have looking Some watching. are holding part from And the cushion at good got of a we keep to to lot perspective, but the company. things is who

you that, should So continue. will that think

Ed Spehar

it’s Ed. Elyse, Hey,

Just to on follow-up that.

sheet are first in I environment. we to the strength Eric's Just all, current comments, echo prioritizing of mean, balance

numbers, just on to that I say authorization. that of company just RBC ratio, million approximately can no this, think think all balance our the and holding maturities from I would sheet. see you there's $X.X remaining debt XXX% And our speaks you would I prioritizing XXX% the give but cash, then to of So you until -- XXXX, generally know I to $XXX billion existing statistics

Operator

[Operator Instructions]. And comes from of Gallagher our Evercore. question next Tom

Tom Gallagher

have sooner for make the that of think that looking it's transferred, changes sense whether the evaluating Do for balancing rather which than wouldn't that of something considering looking transact, -- Equitable counterparties, kind the are on the and I number do do to your looking just color, a perspective, deal might think more Hey, at on Eric, Brighthouse you occurred it counterparties if mind. later you variable circle to at to from little wanted annuity, you back out or is emerged terms call of waiting off think want more bit? the you you a want that more of to rates that -- of and might interest you longer diligence headwind just thinking whatever or do realistically for do better low macro want to term to you about, a something do trade Just you like due think are that this spread, really more situation think on, enough more be a bid-ask is you sooner, you? it? Or do this

Eric Steigerwalt

Tom, good morning.

if little Let The that out right? before can I being Unlock new Look, I the sort highlights. think you I stock, rationalize sell -- me expenses, first see business, of the help the pretty capital, and a on we bit been agree said would strategy with has here. that, repurchase guess consistent question. I have

after ratio -- Here holding range and the of plus RBC grew we $X.X an to three we XXX% sit a with years company. at billion XXX% to

here. lot some and using obviously, that, We've pretty shape. darn we're capital, of So, a unlocked repurchase we're of stock good to in

say, you As a been Ed company percent, we've heard as in buy last of the back XX-ish years. couple able to

about made them. like at We'll I something us, Equitable, continue to decided, makes not these okay? paying not want transactions, So looking for whether for fantastic. sense sense to that that think attention it that's not here. it's anybody like And we're we're don't obviously right? think

attention at be be there And Ed, you to So so, be rather we just than don't on message I keep guess later? to assured least would think I would you're here. a going sort if something. can can step, transaction? here. I next sooner we'll of my it overall that's I'm add watching sure going are But everything take is, that the paying

Ed Spehar

time, about no would our plenty is years, clear. I in pretty and ability you to that of I time that not And statistics sheet. until quoted we sheet our over you for addition, balance quarters, an on mentioned the have about said heard environment uncertain balance Tom, the debt Eric maturities say, XXXX, weather something just So, what suggests about

we’ve to would would here be We're the do I of said do sit a today. reiterate would don't We in past, we with happy so something anything. we And from anything need very where strength. just ever position

Tom Gallagher

quarter some just capital follow-up different is my on impact net rates had my on serious when favorable $XXX is, the based the And guess considering you is, reserve hedge review, But the I statutory developments quarter breakage is, is say in that, positive. swap moving million you you I had and this -- difference should what treasury interesting have calculated. directions, in this question versus in putting difference reserving had in not the the have versus I way would hedges the

in that going on -- fared that know to the that something itself time? if derivatives risk? can of think that does could just the there? you’ve is types smooth even So, you basis thoughts mean, that of of the I gap about Or do out change don't terms over of risk basis I But you ways structure practically based buy. you any that's as to maybe to narrow that

Eric Steigerwalt

sure. Yes,

in So significant this would I in say quarter. the would first thing guess take few there's questions there. I the breakage the that hedge I issue with I concept a was mean, that, is

asset up I’ve program billion. our hedge VA I you went stuff to hedge normal look a went first past, the X.X way total by of in stuff is our is to The And quarter. for think $X.X VA quarter, way program requirement the is if back assess you assess a happens. we said the in And As when a not hedge have when happening, do billion. a want was breakage. quarter not assets you That by lot the bad up bad

can are move from around. just numbers our that standpoint, So these be to clear,

is these I in the to we it think past we're is risk. said there million this in mean I correctly of $XXX movement at $XXX the lot instruments basis we we’ve look was the out, when as a think, I unusual. And you of a swaptions. not million using, And pointed types numbers nature quarter, of have

the the derivative So as point I’d requirement reactive other than know, And us. the thing you the the for changes know nature you the of is assets fact ESG. to by definition, relevant rate that given out about rate total asset swap the more rate are the

stuff particularly So, Oh, was together, a define that the all million at of so, of as would unusual. quarter suggest that is $XXX I and that would clarification, this I just think, benefit CTEXX. one not other point sorry,

our look of was $XXX was you equity strong total increase sequentially, in a up in adjusted the market. the which the million at as half result capital of quarter, about If that

I or talk it all was that know that you and was other due there us half about, missed? convergence-divergence So the I phenomenon to get something update. heard assumption Did you've the

Tom Gallagher

got That it. You Thanks. helpful.

Operator

question And Piper Sandler. John our of next comes Barnidge from

John Barnidge

The a quite withdrawal annuities. ago a from any how are year down to there thinking activity as beginning a period this of and perspectively? the you of note assets about bit trends percent and ticked Are

Conor Murphy

Hi, John, it's Conor.

a flow flows QX normal QX was from it's say from perspective, so was let's quarter -- an definitely perspective, subdued. So a outflow

instead three quarter, kind to closer running billion. $X.X this were a of we out about were up to a quarter. back billion So billion of month, We $X billion that $X down $X.X

of the the annuitizations little remains yet. very, still continuing of debts but before say consistent I quarter. bit month, every the outflows So from trend a way subdued, components, back to very -- maybe starting every would up We've amount not talked all and

subdued withdrawals. seeing level we're a both in of here a partial and outflows So continuation of full

the not So or very was quarter as but hard from for predict was it's it's trending back up, average it consistent well. I it's where to said, as indeed XXXX, I back which first here, --

Operator

of question Suisse. our from Credit Kligerman next Andrew comes And

Andrew Kligerman

a few items. update Yes, just

of there you million So COVID-XX $XX claims, sensitivity have XXX,XXX pre-tax a per mortalities. out

bit? sensitivity were at to relative take down in expecting. Do about this a you quarter. to that you $XX great came-in You That's million think you what need

Ed Spehar

Andrew. morning, Good

So U.S. for slight $XX the first, XXX,XXX every just we sensitivity was deaths. million a gave correction, after-tax

we of So you XXX,XXX at are, where if around million at third year-to-date claims of were deaths $XX pre-tax. you had look quarter, we've COVID end the right the and U.S.

So after-tax. guidance of been our that what have compares $XXX to million applied would

insured the been an So pronounced The than impact apply. the are had COVID that does initial guidance update. not we and more today of population. assumed the And on that clearly, difference is we're earlier, not general population where on we providing what has between

Andrew Kligerman

now? does you credit, basis you negative your know better just hit you from are also scenario? you out that -- about expected? point previously stress -- Do stand stress And How on than scenario. things you expected coming a on XX where Are your right

John Rosenthal

scenarios. investment quarter roughly suggested our XX over then, say our would first RBC to XXX we've stress But RBC impact over from points I doing a stress point impact that two are three John. would impact call, it's has XX ranged by years. point hi, about our I'd those scenario Andrew, modeling On years. the Since and stress more been

feel basis how asking the moment, you're with I used point likely be. the that less at would stress XXX severe scenario it say to case do If probably we than is

Andrew Kligerman

than thought? emerging Anything worse you

John Rosenthal

mean I been impairments -- $XX so impairments minimal, been far net and are quarter, I been just have -- million. and is have good might pre-tax this a downgrades say the third have no well had no and only expectations, Actually both I year-to-date as we moderating. within impairments, In

well, mean, out its future and strong been woods, on extent downgrades Ed we losses portfolio to we're reiterate the any modest the I this additional losses, sectors. impact what too high of say virus industry thus depend me recovery let that future would and expect and and forward. of But well-positioned would for to that to the matter, expectation early given certain a But specific environment, It large general expected. said losses quite is weather of for diversification. uncertain than additional degree our to on lower the the to-date and to Eric damage the quality its have have some As will losses, is certainly amount we has going in

Operator

Citi. And our with next from Kamath Suneet comes question

Suneet Kamath

on could. I if I start wanted to statutory

at quarter? any as look capital Ed your and you guess million big in the reform VA $XXX capital got of this deviations there that are could current assumptions, you other like lead benefit I to something So sort that third

Ed Spehar

the So quarter. answer impact about so. just is, the don't believe a the I spend had in let me short that second But we talking

that as what conservative in and adopted at remarks that of be last a fully We that through of we early models the consequence we put year, impact, reform, a and you conservative at And sure overly assumption, because assumptions year-end model. did the understood in prepared late aligning the to consistent changing know no end we've we in last assumption as we identified was I result So, it with thought we our been unintended not was make wanted this. to our VA assumptions the year. models an which mentioned there

And this making were year, so that we’ve we spent very a assumption clear our model. on in time of decent impact this of amount the sure

is third that's in appropriate gotten see you we've the that comfort assumption make change. it it to And so why update. a quarter And

that total And at As our average annuity calculation which requirement. the a into I invested yield. our was above total the the are support assets in fully yield prepared average this number, is factored said asset requirement, remarks, of substantial asset not market yield current variable an

to earned is a not was was rate. our but little reiterate, in just add this now to aligned rate, yield average discount just with color, And new So in more approach the reflected the reflected reform. it VA

Suneet Kamath

the review? we on on can side, that of related change then should And of lower point And ongoing mean kind GAAP kind the much from from you sense, rate starting of earnings expect assumption? any give was in this we charge, then reversion the a about how versus impact assumption your interest when operating the a think

Ed Spehar

between Okay, life the of was me billion charge change. roughly universal VA. that with split rate total start it interest secondary XX-XX to of so and the billion, let $X.X guarantees $X.X was related with of And

mean year in about million 'XX. reversion in was it place of on tax. And after charge versus put So after-tax side, I for $XXX ULSG the about $XXX the as change that we -- the quarter that's last third said million a

in the the because came versus So basis down change year, points is this with XX came rate we last year. this down the year, points year impact last we consistent XX basis

about clear, this never with statutory, interest second just on reversion mean ULSG in BRCD, at we it assume stat. conservative always a even linearity make level. when with. captive in as types just to is all, you've But even assumptions our Reinsurance isn't say Company highlight with GAAP. a of to ULSG And stat, of but would look terms of reserves, you at secondary first rate associated at are I have current look concept. I XX% larger And of This of when of risk has repeatedly block. all, these the here, relevant GAAP have lower do have more reinsurance the of seeing to to you margins terms at we nothing So, begin And percentage that And in things. it for of in than And rates significant Delaware, substantially heard guarantees. we testing impact rate the we the think Brighthouse cash suggest the flow past, we me that in should the

to make that here distinction sure and have between just GAAP we So stat.

risk for rate. to annuity. And bigger versus a move for Turning year. charge our spreads had that the $XXX free GAAP the legacy VA inversely assumed We We million last impact this that would credit nothing essentially for had the reason to year. models had is this

XX treasury and the of you if about credit years, a between XX-year yield you'll the negative spreads. correlation back go last so And over see X.X

year, decided we've to a assumption, that for which this had a there's little it’s assume relationship level, With approach at meant historical assumed that we and So applies. this longer last no lower rates is impact. very basis certainly conservative a

negative And really essentially we that this nothing had explains year. So impact why -- not any we reason the assume did credit year last a versus spread offset.

Suneet Kamath

any then impact? ongoing And

Ed Spehar

from ongoing Yes, earnings material changes. impact shouldn't sorry. There any on adjusted these be

Operator

you. our session. any Thank conclude to I this gentlemen, back turn to would ladies call remarks. closing over now and question-and-answer the for David Rosenbaum does like And

David Rosenbaum

talking quarter. participating you on forward and call today's interest look And Thank to next with Brighthouse. for your Alright. we for all in you again

Operator

call. this you for conference concludes participating. Thank today's Ladies and gentlemen,

You may now disconnect.

Brighthouse Financial (BHF) 6 Nov 202020 Q3 Earnings call transcript