BHF - Earnings call transcript Q2 2021 | Brighthouse Financial, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to Brighthouse Financial's Second Quarter 2021 Earnings Conference Call. My name is Howard, 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 Instructions]. [Operator now I Head the presentation of to over turn Relations. would like to Investor David Rosenbaum, Mr. Rosenbaum, you may proceed.

David Rosenbaum

XXXX joining and Financial's you morning for Good second thank quarter earnings call. Brighthouse

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

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

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

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

Eric Steigerwalt

the Once listening and hope Today, good results safe your David, our results the strategy. everyone of and I provide second from our again, loved quarter. income continued in morning, given that discuss quarter Thank will execution and was alternative quarter you, very delivered strong market second I on everyone. and ones are Investment well. remaining Brighthouse perspectives today some the first performance. strong, investments

a quarter. than reminder, strong the in a As margin to We investment lag. manage normal and expenses. was one with alternative The we a another on line more delivered quarter reported prudently lower continued but quarter, is underwriting income results, of generally quarter prior sales

was robust range expected. position and as XXX% sheet in balance ratio remained We risk-based hedging and capital and between our target combined markets. between well XXX% in normal or XXX% and Our above our RBC program estimate second quarter liquidity our that of performed the XXX%

Ed will assets holding Additionally, paid details the which Company results Brighthouse shortly. or $XXX company financial provide we billion, with our $X.X dividend more company from Life approximately BLIC. of the ordinary million quarter ended a to holding liquid includes Insurance the on at

we unlocking and capital, have growing As our focused remained our common strategy stock. said on sales, managing repurchasing before, has expenses,

Access. with billion, quarter. Annuity sales, on up second were a the pillars. our Let with reported me provide pleased and quarter $X.X expectations. our level second shield of of sales ahead compared each flagship We few both annuities XX% record for these FlexChoice with our annuities in perspectives Starting variable XXXX, of very with results sales I'm quarter the approximately and this our

this strategy. to I of making execute that quarter focused of existing the we insurance sales very as insurance on progress as We products, XXXX, also $XX we're we our well expectations. approximately further continuing clients generated life with in suite our level to annuities. to enhancing Additionally, remain our enhancements million our remained continue distribution second provide several they ahead and life pleased on footprint bolster value in launched We we of shield of also our footprint. believe our partners of to the Earlier week, the serve. we our distribution the July, while distribution further competitiveness as for Also, SmartCare. shield, expanding grew these enhancements

product insurance As to outflows annuity $XXX net wholesalers, we partners, continued expect enhance strong add the additional add sales. to offset execute were we on as our quarter, bring were in distribution strategy, by million our continue to mix. and life outflows partially and Total

previously, times business said continued business, in cash a new many less intensive flow coupled capital less with more add shift see of overtime, runoff As and as we business. we profitable we expect our older, the to have profile mix generating

We XXXX. contract our and in year as $XX their expenses. first approximately the establishment achieving and before, $XXX Corporate financial million. said public to we expenses, I've the additional company. in remainder policyholders do not quarter. in costs that were reduction were an well of That will $XX continue With we million seek Turning professionals, to as costs, distributors corporate to previously remain enhance relative million expenses as the support our our we expense reduction focused as Establishment invest as was said, million in and XXXX. which include infrastructure to second $XXX our committed to our cumulative $XXX on holders. million a provide a XXXX We commitment in in

to Moving capital.

BRCD billion July, regulatory announce dividend Delaware capital balance a Brighthouse $XXX unlocked company of we parent and almost We take capital, we hedging to refer Since million as billion of variable including that am statutory to share or I to continue BLIC. its to XXXX, our our have strength statutory Company related focus from we on sheet de-risking pleased repurchase program. it approval to the Reinsurance of to support optimizing received in $X strategy. our extremely annuity to $X

additional through reduction this represents million Last of And since our of the repurchase approximately program. new our purchased of of common stock. second of of we approximately end more repurchased became This repurchase billion than company. up common XX% stock Since $XX a to discuss our authorization time me stock in year, of $XXX an an XXXX, stock. In repurchase our of second X, a quarter our quarter stock. $X.X let common were we our August announcement shares have stock. announced from common of we the Xth we of an authorization independent to almost billion the public first the XXXX through August August the Lastly, million night, $X we of additional repurchased outstanding

authorization this very new our financial to by We strength, commitment returning and with our as ongoing our it to to shareholders. end this of of achieve billion reflects us return positions capital the supports year, shareholders pleased $X.X our to are goal our

recently Before I'd of a Rosenbaum, turning congratulate who of Ed, Brighthouse. Strategy take Product Head over to to like moment and the the David call assumed role to for Pricing

pleased Brighthouse's in I also of planning share last has since has financial As been pivotal I'm Relations as are driving Dana David has finance Director been the for Investor in David Brighthouse Investor of our his and in our has you second him many Investor we years, of for with include Amante our up, launch XXXX of responsibilities since as Head of taken she analysis. David strategy very the Brighthouse on strong sure XXXX, and to number expectations. as most new to delivered thrilled launch over that Relations program. Dana the and also financial I role. role. excited quarter. organization, Brighthouse of served recently To Relations, Head results in better that am our expanded his and and as our know, succeeded in and were wrap we're has than this new Sales part

the We of common we prudently to manage continue repurchased and expenses, in our quarter. stock more

robust. and balance liquidity Our sheet position remained

authorization deliver And results. capital it commitment more during to our ongoing strategy shareholder our quarter that, long-term value. shareholders. on our and with Ed focused unlocked Ed? I'll we the executing to to new to our discuss financial capital our over returning We remain to Additionally, turn supports

Ed Spehar

opportunities capital. fourth and the statutory additional also another regulatory though approximately Eric, the in take between this from Insurance TAC our Life capital June a comments quarter. the in optimize entity ratio company quarter everyone. the capital XXst priority, paid XXXX Brighthouse we adjusted or dividend Thank XXXX we Brighthouse this demonstrated in Life capital with total Insurance $XXX Delaware, on ratio by strength Reinsurance billion, BLIC we XXX% XX, quarter our up to capital as quarter combined $XXX performance dividend position call. June This the dividend I preliminary and million most of XX, explained At we from risk-based equity example estimate the holding morning, for the from strong investment company. Company, take to The and $XXX Company the to which or ordinary was range Company top earnings. of intend in at company. that third of even already adjusted statutory holding consistent a combined I holding RBC to ratio look BLIC results earnings $X.X BLIC XXX%. recent dividend robust is BLIC, the alternatives At efforts. million RBC is from BRCD, Today, from The our capital provide first was TAC of continue will primarily year. of plan strong by statutory dividend reported and or is on to few the to quarter, XXX% dividend fourth to markets Brighthouse Capital was We second a will an communicated and change in these to paid to approval XXX% this the I increase we in portfolio. from March our benefited you, further good discuss position, plan, million yesterday. a was This the dividend or enhances the unchanged

adopted factors the for Commissioners real Additionally, in the changes RBC June, estate. NAIC bonds and of Association to Insurance National or

which in million, we during results. billion earnings breakeven the unchanged first the earnings and second Assuming estimated had $XXX Shifting target impact quarterly $XX the The in earnings, in the changes our adjusted million the the impact liquid to December half statutory adjusted ratio above we XXX% ratio RBC results item same and million compares positive impact end will preliminary costs non-VA XXXX, XXXX, remains from and of of $X.X the RBC notable these on adjusted range quarter. after-tax, two at in interest factor negative reported our to million equity Starting on quarter performance offset included XXX%. compared a in first XX, adjusted We $XXX expectation, is the have assets are negative statutory approximately of rates $XX we one normal first the results, modifications in second When with excluding on was the the to themes. Company of Corporate basis the are of establishment of market the included as XXXX, with adjusted this of well first second Other. the with XXX% quarter, XXX% of key from the effective quarter, mid-single-digit items which from Holding impact there & about estimate XXXX. months, earnings range six earnings, the earnings normalized by in was markets. think quarter were were quarter notable

class. an additional very XX.X% in in a was to the of income asset approximately this the investment return the quarter anticipate return return to in exceeded expectation. primarily XX% second strong, investment we of run $XXX alternative row after-tax quarter. Excess the to was the for the quarterly due X% driver quarterly net alternative This rate million primary earnings that is First, yield investments relative annual

reinsurance with Second, volatility net And was a the of COVID-XX. first of million including share. in that rate number million to underwriting and claims, by consistent claims a quarterly quarterly we than the it We earnings benefit of range while we had and adjusted an normal from the Underwriting per to overall frequency of believe $X.XX margin after-tax approximately in basis. driven of quarterly $XX the the underwriting lower offset quarter, in related pre-tax fluctuations our quarter. the run on reinsurance. potential is margin expectation from than on run $X rate lower anticipate was basis a $XX claims, factors, Overall, severity included

capital meaningful results Run-off higher margin position, conclude, results underwriting the of level, a billion a stock common we expenses adjusted a announced framework were expenses commitment multi-scenario the focused a benefit, total offset this earnings of and earnings offset over regulatory your and underwriting quarter. multiyear the items results loss to to of received of reflect favorable as adjusted lower operator items Sequentially, Turning excluding results notable to items On an by our returned and tax pleased in We the to supports to robust million earnings excluding on shareholders. driven Sequentially, income. determine authorization With our and $XX shareholders the income. We ongoing in mostly to and executing lower to our cash $XXX in by market, dividends. were to the $XXX like driven segment, income of using continue am margin. lower preferred To the We basis, committed an the reported quarter. partially result by notable investment earnings that, adjusted of amount at return maintained were up higher strategy to capital shareholders. the BRCD. Annuity's notable for notable a million. by questions. quarter. partially million returning a turn our were with level capital investment appropriate In repurchase DAC & new $X quarter. million to segment lower Other capital lower segment amortization, stock call items unlock sequential had higher reserves and a were excluding approval adjusted offset Corporate remain Life Sequentially, from additional driven and million higher investment by of we'd net to excluding a of we by I adjusted lower which $XXX very capital higher net results $XX net

Operator

[Operator Instructions].

from from of question Ryan Our or Krueger comment the first comes line KBW.

line open. is Your

Ryan Krueger

prepared fourth quarter. of take I sense remarks morning. us plan Can there? upsizing the you from you you give think that Hey, good Ed, dividend mentioned in another to in the BLIC any

Ed Spehar

morning, Good Ryan. Sure.

would have that we I remaining dividend So take And almost expect capacity million $XXX we ordinary half least to of amount. at BLIC. at

Ryan Krueger

does $XXX Thanks. out to it. seems? more the think does -- guess, plans you've gives -- And about gotten year? Got your this then how that BRCD BLIC out does I of that million of now it cushion I you influence guess another it beyond bit dividend a

Ed Spehar

beginning companies, today capital with reflect quarter the the by Well, position the position. know, as good -- I'd cash we dividend. at RBC the we're ratio the as than holding not very second in we better position as $XXX would saying, BRCD have well start better year. And anticipated does number million company at feel we're of the the about you a our And operating in the

continue show we've And drive that about to capital that, So appropriately we we multi-year, to continued to to management. that the are we using you when in capitalized decisions going we say DE I manage sure framework make this multi-scenario that just tables. company that's our about, would disclose and talked our

Ryan Krueger

Thanks.

got where appropriate that billion out to guess of guess, approved more reserves capacity one on longer-term? reserves? now still closer of additional I follow-up think I $X.X the -- are there's you've of this. dividends BRCD Did view your now, of you Just

Ed Spehar

have; in I margins. So of heard strong talk testing consider we BRCD. BRCD us testing means remember, the that is the a flow as continue this cash of cash assess we look multitude you've after scenarios. our dividend, flow even about, to position And capital to under very at margins primary And

Operator

you. Thank

Dowling next Hung-Fai or comes line & Lee comment of the Partners. Our from question from

open. Your is line

Hung-Fai Lee

and of how buyback think the share taking about we billion pace authorization, there repurchase going should Is a look guess not thank why should the $X about reason any pace for you I guidepost? at questions. thinking the forward? morning of we Good my the as historical

Eric Steigerwalt

Hung-Fai. start I'll

Why give history I would smart to we that our help, as guidepost. think be it little here. Obviously, don't help? you're at flexibility right? to about give you feel a little great a Ed, a look going

Ed Spehar

little A help.

think buyback a plan. interest best of So the shareholders we don't to in discuss future it's

expect And So the I repurchases I'll X% that in ramped market years, our of early continue. I stage as we at of the to we because look market the volume of we've tell If we average the XX% we about been that And of of strategy period. this up X% look last and volume. pandemic, daily couple the you saw, would you what have have done. if a couple during daily think that opportunity strategy at said, to month typically Eric average would

So we August shares separation. that fact to to I XX% the our illustrates return. repurchased our say we've outstanding And commitment think shareholders capital companies. through that know in capital important would of financial that I how Xth, returning since is

Hung-Fai Lee

Okay. Got it.

-- Just think this million like get guess positive was quicker the Any, I switching than timing you $XXX is back the out of to definitely thought. is BRCD $XXX or BRCD like should you've that -- to is now million development any another expect it. the of I about dividend us taken like that that a is probably I of the of help we there a it Like, two like how to row. pace capacity in years kind think -- BRCD? way

Ed Spehar

allow we those of flow I that regulator So points. good say is the out. build suggest I us -- regulator take that that fact we that, believe based to I the feel testing BRCD. start the again, And the two strong. that that wouldn't is data And would to in the agreed, some testing margins I remain you because to that on flow this asked margins about don't pace the reason at reason cash very cash

Operator

Thank you.

Wells comes from Greenspan the line Fargo. comment from or question Our next Elyse of

open. Your line is

Elyse Greenspan

$X there run that to one-off EPS of is as that some a then items, some other underwriting kind is kind COGS, we quarter? run better of a out of being $X.XX, range first gets you Or of when rate, go you the that the so normal something the I underwriting thanks. you back $X.XX? for reported. in of if around question, the around give couple guys level volatility of whereas And pointed $X.XX rate to it you the $X gave to just to Hi, My items assuming quarterly and adjust

Ed Spehar

Good morning, Elyse.

big called quarter the can not say callout you and as items and a So, number item our the of out would every two off underwriting there of we quarter I bigger the this remaining one are did imagine, quarter. in trend, was are investments. would that of impact, that around market disclosures in alternative was we be the notable But one the favorable which ones

Elyse Greenspan

And do that? you have

Ed Spehar

what two really decision what that items suggest. a highlighted the to range -- we that's our that's than so And drove would what a different really give lower that

Elyse Greenspan

then, as back to terms a shifting of guys since out that something right and at you there later the of we're And this you're that pandemic that's buffer capital have a level also looking about is there guys or the company pandemic. maintained any in the Okay. capital, healthy thinking to you changing of year, holding of certainty HoldCo whether kind more buyback the XXXX? new with about for also the hold coming Are thoughts are that

Ed Spehar

Okay.

of in billion were market I equity of board to to ask our quarter, So and we answer for is holding assessing a made authorization. the which to authorization, that cap, largest the how our two I outcome previous repurchase was times is about the the the XX% position. think of last decision $X our assessment And conservatism equivalent appropriate company cash some comments level

Operator

Instructions]. Thank you. [Operator

comment or question Piper the from from line Sandler. John comes Barnidge of next Our

line Your open. is

John Barnidge

going coming growth a you the do sales, higher Can distribution, business you Thank And anticipate, broadening about from maybe gear? see really a you. in to expectations life raised do is Thank or forward? pull-forward from of insurance this you awareness shifting out like the talk you.

Myles Lambert

to sure, Myles, take Yes happy question. this is the

to mentioned SmartCare with sales. really make some continue pleased continue that And we're of expand we as in progress comments, Eric So to his with we prior distribution. the

firms. the a Over to bring been in able a we've dozen weeks, new last half few about

the policy now as it relates providing which new XX,XXX strategically very product. advisors, itself really moving growth the us two excited into SmartCare the access the expanded have for and very continue competitive based indemnity a major great the our are have grow about. approximately is It's cash it benefit performances. forward. growth space. coupled why through on value the it And product BGA has. to with we that that fact job to a partnerships product national to has of see continued with the distributors the few industry force And That embraced the reasons doing opportunity We But selling a that's we're expect sales great we that to with is coupled fact

Conor Murphy

And John, it's Connor.

just also filled on much we Let underscore in to SmartCare well, to year. well. of as all some have XXXX run suite half first me as as the filled working we add last -- as of comment in products one we we're But that life almost other

the those you'll future. see So in

John Barnidge

And there. was that maybe helpful. for the That and follow-up to the thanks is, answers

annuity the of on distribution good having obviously life. side on You're top

some Some Obviously fixed. your expenses are variable. of are

Given for you outlook How the we operating thinking answers. thing? is for Thank still be expenses distribution the about should that within constructive.

Operator

Thank you.

comment or -- question next Our

Ed Spehar

Oh, sorry, Wait, sorry. sorry.

have that. We answer to

Operator

Oh, sorry.

Ed Spehar

than be expenses year of what we half it would on expense, year. first would lower corporate $XXX the operating million in that's of So second the half anticipate the were the

year. what second is don't relative But you where As we you other would any in are can if more low there we I half expect budget imagine, comments. of some and know, still the travel Eric, the further areas to have expense

Eric Steigerwalt

Well, investing and I'll investing in distribution going we're that's continue. both and to we're just in say, operationally sort itself of distribution, strategically,

are going I'm So future. with are now we're make in that and to investments pleased includes the we where in and making expenses that

Operator

you. Thank

the Our Byer of from from Zach comes comment or Research. next Autonomous line question

is line Your open.

Zach Byer

Hi, good morning.

where find of of in results it few agreements becoming the for big to this do question, kind business a this line Also of how Just kind ramp should you nascent year-to-date. up. an done see reporting? a you've deal Curious funding we your quick you how do expect of had and opportunity quickly

John Rosenthal

power an Hi adjusted overall will provide business It's and attractive this really be Zach, diversification. about we premature things so earnings extremely to grow think in, our But are to is $X kind the well. think talking currently far it. product is going to forward and beginning profile We be to you as what to balances. going The it we space in started and the just we're how talk And it's about or as business may bit enhance about returns in business more program John. a grows. of April it have billion it outstanding look to have, of good big we future as risk this

Eric Steigerwalt

it'll it's I'll Corporate Eric. that's while. add. sit a & for in Hey, and just probably Other, It sits where

Operator

[Operator you. Thank Instructions].

a We Ryan from have from Krueger follow-up KBW. Mr.

Your line open. is

Ryan Krueger

Thanks. give bit stat on Can [ph]? detail offsets guess a earnings? the investment Ed, favorable would been provide income, particular, normalized little equity alternative I the the you would I more have you they stronger. a thought and bit given perspective some And have the in could favorable on markets

Ed Spehar

mean, that is that the through unrealized I Sure. of most is recognize the ALF the first coming that in seeing benefit I think from gains. we're thing to

going And tax. in not directly earnings. statutory included It so that's to normalized is

the metrics of and that one statutory you reasons perhaps disconnect between stat. the of some that's the see other So norm

of talked about a results fact first And quarter, then talked quarters, now mortality think less would first the and came the despite we to down. And for good we million have second a the in framework. had two amount The which annual so year-to-date non-VA we quarter, as accounting factor. second point we that what full-year the results, know, that favorable in as $XXX us about quarters, interest the the VA of mean rates you've the $XXX -- we identified for you that, than I been And thing talk And normally about lower hit that's heard I for that impact quarter, absorb we believe the the have two being reversion is change. anticipate. statutory represents million

a have in in a -- indexed both well didn't did VA rates from negative our quarter in we liabilities. second business fixed impact as So we impact annuity as the the modest

Ryan Krueger

that there lower to Just rates on but is lower point mean have no aversion impact, is point, that starting you the last on the reflect correct? additional

Ed Spehar

No.

Operator

Thank queue like no any closing I'm I'd Amante additional over Ms. to at Dana time. showing questions back in turn remarks. this the to the you. conference for

Dana Amante

your joining working in interest great you Brighthouse look you. Have with to I Financial. all Thank forward for and day. for us a today

Operator

thank participating and today's concludes for you gentlemen, conference. Ladies in This the program.

now wonderful Everyone may You disconnect. day. a have

Brighthouse Financial (BHF) 6 Aug 212021 Q2 Earnings call transcript