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Brighthouse (BHF) Q2 Earnings and Revenues Top, Increase Y/Y

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Brighthouse Financial Inc.'s (BHF - Free Report) second-quarter 2021 adjusted net income of $5.32 per share surpassed the Zacks Consensus Estimate by 70.5%. Moreover, the bottom line improved nearly 13-fold year over year.

The reported quarter witnessed continued sales growth in Annuities and Life.

Brighthouse Financial, Inc. Price, Consensus and EPS Surprise

Behind the Headlines

Total operating revenues of $2.4 billion beat the Zacks Consensus Estimate by 10.6%. Moreover, the top line improved 39.8% year over year, driven by higher universal life and investment-type product policy fees, net investment income as well as other income.

Premiums of $162 million decreased 16.1% year over year.

Adjusted net investment income was $1.2 billion in the quarter under review, up 85.5% year over year. The improvement was driven primarily by higher alternative investment income. Investment income yield was 5.08%.

Total expenses increased 3.4% year over year to $1.7 billion due to an increase in policyholder benefits and claims and other expense. Corporate expenses, pre-tax, were $218 million.

Quarterly Segmental Update

Annuities’ adjusted operating income of $338 million skyrocketed 97.7% year over year, reflecting higher net investment income, higher fees, lower deferred acquisition costs ("DAC") amortization and lower reserves, partially offset by higher expenses.. Annuity sales increased 25% to $2.3 billion driven by record sales of Shield Level annuities and variable annuities with FlexChoice Access.

Life generated adjusted operating income of $68 million, up 41.7% year over year driven by higher net investment income, partially offset by a lower underwriting margin. Life insurance sales surged 111% to $26 million driven by sales of SmartCare.

Adjusted operating earnings of Run-off were $122 million, rebounding from the year-ago loss of $115 million, and higher net investment income, partially offset by a lower underwriting margin.

Adjusted operating loss at Corporate & Other was $93 million, flat year over year as higher total preferred stock dividends was offset by lower expenses.

Financial Update

Cash and cash equivalents were $4.9 billion, down 33.3% up year over year. Long-term debt of $3.4 billion declined 13.6% year over year.

Shareholders’ equity of $16.2 billion at the end of the quarter decreased 22.9% year over year.

Book value per share, excluding accumulated other comprehensive income (AOCI), was $120.62 as of Dec 31, 2020, down 25.9% from 2020 end.

As of Jun 30, 2021, estimated combined RBC ratio was between 480% and 500%.

Capital Deployment

Brighthouse bought back shares worth $246 million this year through Aug 4. It had $34 million remaining under its authorization as of Aug 4, 2021

The board of directors also approved a new $1 billion share buyback program.

The company received $250 million subsidiary ordinary dividend.

Zacks Rank

Brighthouse currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Second-quarter earnings of Manulife Financial (MFC - Free Report) , Lincoln National (LNC - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) beat the respective Zacks Consensus Estimate.