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Brighthouse Financial (BHF) Q4 Earnings Miss, Revenues Beat

Zacks Equity Research

Brighthouse Financial Inc.'s BHF fourth-quarter 2018 adjusted net income of $1.56 per share missed the Zacks Consensus Estimate of $1.74 by 10.3%. The bottom line however increased more than fourfold from 37 cents earned in the year-ago quarter.

The reported quarter witnessed continued sales growth in annuities and an improvement in net investment income.

For full year 2018, adjusted net income came in at $8.33 per share.

Behind the Headlines

Total revenues of $4 billion surged 114.1% year over year. It outpaced the Zacks Consensus Estimate by 96.5%. 

Premiums of $223 million decreased 4.3% year over year. 

Adjusted net investment income was $863 million in the quarter under review, up 10.6% year over year. This improvement was fueled by growth in average invested assets, the ongoing repositioning of the investment portfolio, and higher alternative investment income.  Investment income yield was 4.48%.

Corporate expenses of $233 million pretax decreased 3.7% year over year.

Total expenses increased 6.5% year over year to $2.2 billion on increase in amortization of deferred acquisition costs and value of business acquired, and higher interest expense.

Brighthouse Financial, Inc. Price, Consensus and EPS Surprise

Brighthouse Financial, Inc. Price, Consensus and EPS Surprise | Brighthouse Financial, Inc. Quote

Quarterly Segment Update

Annuities reported adjusted operating income of $175 million, down 15.9% year over year reflecting higher deferred acquisition costs amortization, higher reserves and lower fees, driven primarily by negative market performance in the quarter, and higher claims, partially offset by higher net investment income and lower expenses. Annuity sales increased 27% to $1.7 billion, driven by solid sales of Shield and fixed indexed annuities.

Life generated adjusted operating income of $64 million, having increased nearly 13-fold year over year on lower claims and higher net investment income. Life insurance sales were $1 million, down 67% year over year.

Adjusted operating earnings of Run-off was $18 million, rebounding from the year-ago loss of $80 million.

Adjusted operating loss at Corporate & Other was $71 million, which compared unfavorably with prior-year earnings of $859 million due to lower net investment income and higher interest expense on debt.

Financial Update

Cash and cash equivalents were $4.1 billion, up 123% year over year.

Shareholders’ equity of $14.4 billion at quarter-end decreased 0.7% year over year.

Book value per share, accumulated other comprehensive income, was $116.58 as of Dec 31, 2018, up 8.8% year over year.

Share Buyback Program

Brighthouse Financial bought back shares worth $63 million in the fourth quarter taking the full-year total to $105 million.

Zacks Rank

Brighthouse Financial currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Life Insurers

Among other players from the life insurance industry who have already reported fourth-quarter earnings, Lincoln National Corporation LNC and Reinsurance Group of America, Incorporated. RGA surpassed the respective Zacks Consensus Estimate for earnings while Genworth Financial Inc. GNW missed the same.

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