Brighthouse (BHF) Q3 Earnings Top, Revenues Lag Estimates
Brighthouse Financial Inc. BHF reported third-quarter 2023 adjusted net income of $4.18 per share, which beat the Zacks Consensus Estimate by 3.7%. The bottom line rebounded from the year-ago loss of 4 cents per share.
The results reflected higher revenues and lower expenses.
Behind the Headlines
Total operating revenues of $2.1 billion increased 9.6% year over year, driven by higher premiums, net investment income and other income. The top line, however, missed the consensus mark by 3.9%.
Brighthouse Financial, Inc. Price, Consensus and EPS Surprise
Brighthouse Financial, Inc. price-consensus-eps-surprise-chart | Brighthouse Financial, Inc. Quote
Premiums of $194 million increased 19.8% year over year.
Adjusted net investment income was $1.2 billion in the quarter under review, up 36.3% year over year, driven by asset growth and higher interest rates. The investment income yield was 4.2%.
Total expenses declined 4.8% to $580 million due to favorable changes in market risk benefits. Corporate expenses, pretax, were $210 million.
Quarterly Segmental Update
Annuities recorded an adjusted operating income of $319 million, down 57.9% year over year, attributable to higher expenses, lower fees and higher reserves, partially offset by higher net investment income. Annuity sales decreased 30.47% to $2.6 billion on lower fixed deferred annuities.
Life’s adjusted operating loss was $73 million compared with a loss of $34 million in the year-ago quarter. The year-over-year deterioration was due to higher expenses and a lower underwriting margin, partially offset by higher net investment income. Life insurance sales increased 31.6% to $25 million.
Adjusted operating earnings at Run-off were $95 million against the year-ago loss of $16 million.
Corporate & Other incurred an adjusted operating loss of $57 million, narrower than the prior-year loss of $37 million, reflecting higher net investment income and underwriting margin.
Financial Update
Cash and cash equivalents were $3.8 billion, down 19.9% year over year.
Shareholders’ equity of $4 billion at the end of the third quarter of 2023 decreased 11.5% year over year.
Book value per share, excluding accumulated other comprehensive income, was $146.61 as of Sep 30, 2023, up 3.6% year over year.
Statutory combined total adjusted capital was $7.3 billion as of Sep 30, 2023, down 8.8% year over year.
As of Sep 30, 2023, the estimated combined risk-based capital ratio was in the range of 400%-420%.
Share Buyback Program
Brighthouse bought back shares worth $64 million in the third quarter of 2023, with another $27 million year through Nov 3, 2023.
Zacks Rank
Brighthouse currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Life Insurers
Voya Financial VOYA reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income. Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Lincoln National Corporation LNC reported third-quarter 2023 adjusted earnings of 23 cents per share, which missed the Zacks Consensus Estimate by 86.9%. However, the bottom line significantly improved from a loss of $11.49 a year ago. Adjusted operating revenues grew 5.7% year over year to $4.7 billion. The top line missed the consensus mark by 1.6%.
The Annuities segment recorded an operating income of $248 million, which decreased 9.8% year over year and missed the estimate by 9%. The metric suffered from increased expenses. Operating income in the Retirement Plan Services segment came in at $43 million, which fell 9% year over year and missed our estimate of $47.1 million due to an elevated expense level. The Life Insurance segment reported an operating income of $173 million in the quarter under review, improving 92% year over year, as the year-ago income included massive unfavorable notable items. The Group Protection segment recorded an operating income of $68 million in the quarter under review, which rose from $12 million a year ago but remained lower than our estimate. This significant jump can be attributed to better disability underwriting results.
American Equity Investment Life Holding Company AEL reported third-quarter 2023 adjusted net earnings of $2.45 per share, which beat the Zacks Consensus Estimate by 45.8%. The bottom line rebounded from the year-ago loss of 10 cents per share. Operating total revenues were $694.3 million, up 1.4% year over year due to higher annuity product charges and other revenue.
Premiums and other considerations decreased 6.4% year over year to $2.6 million. The figure was lower than our estimate of $3.2 million. Net investment income decreased 3.8% on a year-over-year basis to $586.6 million. The figure was higher than our estimate of $549.7 million. The investment spread was 2.73%, unchanged from the year-ago quarter.
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