Brighthouse Financial Inc (BHF) Faces Net Loss in Q4 Despite Strong Annuity Sales
Net Loss: Brighthouse Financial Inc (NASDAQ:BHF) reported a Q4 net loss of $942 million, a significant shift from the prior year's Q4 net income of $110 million.
Adjusted Earnings: Q4 adjusted earnings stood at $177 million, down from $545 million in Q4 2022, reflecting market volatility and legal matters.
Annuity Sales: Full year annuity sales reached $10.6 billion, driven by strong sales of Shield Level annuities.
Share Repurchases: BHF repurchased $250 million of its common stock in 2023, reducing shares outstanding by 7%.
Liquidity and Capitalization: Holding company liquid assets were reported at $1.3 billion, with an estimated combined RBC ratio of approximately 420%.
On February 12, 2024, Brighthouse Financial Inc (NASDAQ:BHF) released its 8-K filing, detailing its financial results for the fourth quarter and full year ended December 31, 2023. BHF, a prominent provider of annuity products and life insurance in the United States, operates through segments including Annuities, Life, and Run-off, with the majority of its revenue stemming from the Annuities segment.
Financial Performance and Challenges
Brighthouse Financial Inc (NASDAQ:BHF) faced a challenging fourth quarter, reporting a net loss available to shareholders of $942 million, or $14.70 per diluted share. This marked a stark contrast to the net income of $110 million in the fourth quarter of the previous year. The company attributes this loss primarily to the decrease in the value of its hedges due to market performance, a common volatility factor for companies in the insurance industry.
Despite the net loss, BHF's adjusted earnings for the fourth quarter, excluding notable items, were $189 million, or $2.92 per diluted share. The company's strong balance sheet was evidenced by its estimated combined risk-based capital (RBC) ratio of approximately 420% and holding company liquid assets totaling $1.3 billion. These metrics are crucial for insurance companies, as they reflect financial stability and the ability to meet policyholder obligations.
Financial Achievements and Industry Significance
Brighthouse Financial Inc (NASDAQ:BHF) reported robust annuity sales for the full year 2023, totaling $10.6 billion, with Shield Level annuities driving the growth. This performance underscores the company's competitive position in the annuity market and its ability to attract and retain customers with its product offerings. Additionally, life sales for the full year amounted to $102 million.
The company's commitment to shareholder returns was evident through its repurchase of $250 million of its common stock in 2023, reducing the shares outstanding by 7%. Furthermore, BHF repurchased an additional approximately $30 million year-to-date through February 9, 2024, leaving approximately $763 million remaining under its current share repurchase authorizations.
Key Financial Metrics
Brighthouse Financial Inc (NASDAQ:BHF) ended the fourth quarter with a book value of $3.2 billion, or $51.08 per common share, and a book value excluding accumulated other comprehensive income (AOCI) of $8.5 billion, or $133.69 per common share. Adjusted net investment income for the quarter was $1,226 million, reflecting the company's investment portfolio performance.
"Looking back on the year, I am proud of our many accomplishments, including maintaining our target capitalization and robust liquidity, generating strong sales results, further strengthening our annuity and life insurance product suites and returning additional capital to our shareholders through repurchasing more of our common stock," said Eric Steigerwalt, president and CEO, Brighthouse Financial.
Analysis of Company Performance
The financial results of Brighthouse Financial Inc (NASDAQ:BHF) for the fourth quarter and full year 2023 reveal a mixed performance. While the company faced a net loss in the fourth quarter due to market-driven hedge value decreases, its full-year results highlight strong annuity sales and a solid capital position. The company's proactive measures in share repurchases and maintaining liquidity demonstrate a strategic approach to managing capital and enhancing shareholder value.
As BHF navigates the inherent volatility of the insurance industry, its strong balance sheet and liquidity, combined with strategic product offerings, position it well for future stability and growth. Investors and stakeholders will likely monitor the company's ability to manage market risks and continue delivering value in the coming periods.
For a more detailed analysis and to access the full earnings report, please visit the Brighthouse Financial Investor Relations webpage.
Explore the complete 8-K earnings release (here) from Brighthouse Financial Inc for further details.
This article first appeared on GuruFocus.
