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Brighthouse Financial Inc.'s (BHF - Free Report) third-quarter 2020 adjusted operating income of $4.19 per share outpaced the Zacks Consensus Estimate by 26.6%. Moreover, the bottom line improved 79.8% year over year.
The quarter witnessed higher annuity and life sales, and improved net investment income, partly offset by lower premiums and elevated expenses.
Behind the Headlines
Operating revenues of $2.2 billion increased 2.8% year over year, primarily due to higher universal life and investment-type product policy fees, net investment income and other revenues, partly offset by lower premiums.
Premiums of $184 million slumped 14% year over year.
Adjusted net investment income was $1 billion in the quarter under review, up 7.9% year over year, due to increased alternative investment income. Net investment income yield came in at 4.42%.
Corporate expenses of $204 million pre-tax decreased 2.9% sequentially.
Total expenses escalated 74.2% year over year to $4.2 billion on higher interest credited to policyholder account balances, rise in policyholder benefits and claims, and increased amortization of DAC and VOBA.
Brighthouse Financial, Inc. Price, Consensus and EPS Surprise
Annuities’ adjusted operating income of $387 million soared 90.6% year over year. The results were primarily driven by reduced expenses, and lower deferred acquisition costs ("DAC") amortization and reserves, partly limited by decline in fees. Annuity sales improved 29% year over year to $2.3 billion.
Life generated adjusted operating income of $76 million, up 4.1% year over year. The results indicate improved net investment income and reduced DAC amortization. Life sales surged 63% year over year to $13 million.
The Run-off segment incurred adjusted loss of $1.1 billion, which was wider than the prior-year quarter’s adjusted loss of $426 million. The downside was due to dip in underwriting margin, partly mitigated by improved net investment income.
Adjusted operating loss at Corporate & Other was $13 million, which was narrower than loss of $19 million incurred in the year-ago quarter. The lower loss reflects reduced expenses and decline in taxes.
Financial Update
As of Sep 30, 2020, cash and cash equivalents were $6.2 billion, up 44.3% year over year.
Shareholders’ equity of $18.3 billion at third quarter-end increased 3.2% year over year.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $132.55 as of Sep 30, 2020, up 5.6% year over year.
Share Buyback Program
Brighthouse Financial had put its share buyback program on hold on May 11 of this year amid the financial uncertainties induced by the COVID-19 pandemic. On Aug 24, the company came up with the news of recommencing share repurchases. Notably, it bought back shares worth $54 million in the third quarter.
Of the insurance industry players, which have reported third-quarter results so far, earnings of Primerica, Inc. (PRI - Free Report) , Assurant, Inc. (AIZ - Free Report) and MetLife, Inc. (MET - Free Report) beat the respective Zacks Consensus Estimate.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Brighthouse (BHF) Q3 Earnings Beat Estimates, Improve Y/Y
Brighthouse Financial Inc.'s (BHF - Free Report) third-quarter 2020 adjusted operating income of $4.19 per share outpaced the Zacks Consensus Estimate by 26.6%. Moreover, the bottom line improved 79.8% year over year.
The quarter witnessed higher annuity and life sales, and improved net investment income, partly offset by lower premiums and elevated expenses.
Behind the Headlines
Operating revenues of $2.2 billion increased 2.8% year over year, primarily due to higher universal life and investment-type product policy fees, net investment income and other revenues, partly offset by lower premiums.
Premiums of $184 million slumped 14% year over year.
Adjusted net investment income was $1 billion in the quarter under review, up 7.9% year over year, due to increased alternative investment income. Net investment income yield came in at 4.42%.
Corporate expenses of $204 million pre-tax decreased 2.9% sequentially.
Total expenses escalated 74.2% year over year to $4.2 billion on higher interest credited to policyholder account balances, rise in policyholder benefits and claims, and increased amortization of DAC and VOBA.
Brighthouse Financial, Inc. Price, Consensus and EPS Surprise
Brighthouse Financial, Inc. price-consensus-eps-surprise-chart | Brighthouse Financial, Inc. Quote
Quarterly Segment Update
Annuities’ adjusted operating income of $387 million soared 90.6% year over year. The results were primarily driven by reduced expenses, and lower deferred acquisition costs ("DAC") amortization and reserves, partly limited by decline in fees. Annuity sales improved 29% year over year to $2.3 billion.
Life generated adjusted operating income of $76 million, up 4.1% year over year. The results indicate improved net investment income and reduced DAC amortization. Life sales surged 63% year over year to $13 million.
The Run-off segment incurred adjusted loss of $1.1 billion, which was wider than the prior-year quarter’s adjusted loss of $426 million. The downside was due to dip in underwriting margin, partly mitigated by improved net investment income.
Adjusted operating loss at Corporate & Other was $13 million, which was narrower than loss of $19 million incurred in the year-ago quarter. The lower loss reflects reduced expenses and decline in taxes.
Financial Update
As of Sep 30, 2020, cash and cash equivalents were $6.2 billion, up 44.3% year over year.
Shareholders’ equity of $18.3 billion at third quarter-end increased 3.2% year over year.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $132.55 as of Sep 30, 2020, up 5.6% year over year.
Share Buyback Program
Brighthouse Financial had put its share buyback program on hold on May 11 of this year amid the financial uncertainties induced by the COVID-19 pandemic. On Aug 24, the company came up with the news of recommencing share repurchases. Notably, it bought back shares worth $54 million in the third quarter.
Zacks Rank
Brighthouse Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players, which have reported third-quarter results so far, earnings of Primerica, Inc. (PRI - Free Report) , Assurant, Inc. (AIZ - Free Report) and MetLife, Inc. (MET - Free Report) beat the respective Zacks Consensus Estimate.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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