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Brighthouse Financial (BHF) Q3 Earnings Top, Revenues Up Y/Y

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Brighthouse Financial Inc.'s (BHF - Free Report) third-quarter 2018 adjusted net income of $2.23 per share outpaced the Zacks Consensus Estimate of $2.19 by 1.8%. The bottom line also rebounded from the year-ago loss of $5.64.

Brighthouse Financial, Inc. Price, Consensus and EPS Surprise

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

Net loss came in at $2.26 per share, wider than $7.87 loss incurred in the year-ago quarter.

Behind the Headlines

Operating revenues of $1.2 billion inched up 1.9% year over year.

Premiums of $225 million decreased 4.7% year over year.  

Adjusted net investment income was $852 million in the quarter under review, up 9.2% 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 4.5%.

Corporate expenses of $242 million pre tax decreased from $288 million pre tax in the second quarter of 2018.

Total expenses declined 14.6% year over year on lower interest credited to policyholder account balances, policyholder benefits as well as a decrease in amortization of deferred acquisition costs and value of business acquired.

Quarterly Segment Update

Annuities reported adjusted operating income of $401 million, up nearly 13% year over year on higher net investment income, partially offset by a rise in deferred acquisition cost and escalated expenses. Annuity sales surged 43%, driven by solid sales of Shield and fixed indexed annuities.

Life generated adjusted operating income of $61 million, having increased more than 10-fold year over year. This uptick stemmed from higher net investment income and lower DAC amortization, partially offset by growth in claims. Life insurance sales were $2 million in the quarter under consideration.

Adjusted operating loss in Run-off was $105 million against earnings of $83 million in the year-earlier period. This downside was attributable to higher claims and reserve development plus lower net investment income, partially offset by reduced expenses.

Adjusted operating loss at Corporate & Other was $87 million, much narrower than the prior-year loss of $1.1 billion due to lower expenses, partially offset by a decline in net investment income.

Financial Update

Cash and cash equivalents were $2.1 billion, up 26.3% year over year.

Shareholders’ equity of $12.9 billion at the quarter-end decreased 6.4% year over year.

Book value per share was $103.80 as of Sep 30, 2018, down 0.2% year over year.

Share Buyback Program

Brighthouse Financial bought back shares worth $42 million in the third quarter.

Zacks Rank

Brighthouse Financial 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 Insurers

Among other players from the insurance industry having already reported third-quarter earnings, the bottom line of Genworth Financial Inc. (GNW - Free Report) , Lincoln National Corporation (LNC - Free Report) and Reinsurance Group of America, Incorporated. (RGA - Free Report) surpassed the respective Zacks Consensus Estimate.

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