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Brighthouse Financial Inc.'s (BHF - Free Report) third-quarter 2021 adjusted operating income of $6.17 per share outpaced the Zacks Consensus Estimate by 88.1%. The bottom line improved 47.2% year over year.
The quarter witnessed higher annuity and life sales, improved net investment income, higher premiums, and lower expenses.
Brighthouse Financial, Inc. Price, Consensus and EPS Surprise
Operating revenues of $2.5 billion increased 14.4% year over year due to higher net investment income and other revenues, and higher premiums. Premiums of $193 million increased 4.9% year over year.
Adjusted net investment income was $1.3 billion in the quarter under review, up 28.6% year over year driven by higher alternative investment income and asset growth. Net investment income yield came in at 5.16%.
Corporate expenses of $222 million pre-tax increased 1.8% sequentially.
Total expenses decreased 51.3% year over year to $2 billion on lower interest expense on debt, a decrease in policy-holder benefits and claims, and decreased amortization of deferred acquisition costs (DAC) and value of business acquired (VOBA).
Quarterly Segment Update
Annuities’ adjusted operating income of $385 million decreased 0.5% year over year, reflecting higher net investment income and fees partially offset by higher expenses, higher reserves, and higher DAC amortization. Annuity sales increased 1% year over year driven by record sales of variable and Shield Level annuities, which increased a combined 54% primarily offset by lower sales of fixed-rate annuities.
Life generated adjusted operating income of $110 million, up 44.7% year over year. The results indicate higher net investment income, partially offset by a lower underwriting margin. Life sales surged 108% year over year, driven by sales of SmartCare.
The Run-off segment reported adjusted earnings of $38 million, which was against the prior-year quarter’s adjusted loss of $1.1 billion. The results reflect higher net investment income partially offset by a lower underwriting margin.
Adjusted operating loss at Corporate & Other was $83 million, which was wider than the loss of $13 million incurred in the year-ago quarter. The wider loss reflects a lower tax benefit.
Financial Update
As of Sep 30, 2021, cash and cash equivalents were $4.1 billion, down 33.6% year over year.
Shareholders’ equity of $16 billion at third quarter-end decreased 12.2% year over year.
Book value per share, excluding accumulated other comprehensive income was $128.24 as of Sep 30, 2021, down 3.2% year over year.
Share Buyback Program
In the third quarter, Brighthouse Financial repurchased shares worth $149 million with an additional $61 million of shares repurchased on a trade-date basis through Nov 2, 2021.
Of the insurance industry players, which have reported third-quarter results so far, earnings of Athene Holding Ltd. , American Financial Group (AFG - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) beat the respective Zacks Consensus Estimate.
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Brighthouse (BHF) Q3 Earnings Beat Estimates, Improve Y/Y
Brighthouse Financial Inc.'s (BHF - Free Report) third-quarter 2021 adjusted operating income of $6.17 per share outpaced the Zacks Consensus Estimate by 88.1%. The bottom line improved 47.2% year over year.
The quarter witnessed higher annuity and life sales, improved net investment income, higher premiums, and lower expenses.
Brighthouse Financial, Inc. Price, Consensus and EPS Surprise
Brighthouse Financial, Inc. price-consensus-eps-surprise-chart | Brighthouse Financial, Inc. Quote
Behind the Headlines
Operating revenues of $2.5 billion increased 14.4% year over year due to higher net investment income and other revenues, and higher premiums.
Premiums of $193 million increased 4.9% year over year.
Adjusted net investment income was $1.3 billion in the quarter under review, up 28.6% year over year driven by higher alternative investment income and asset growth. Net investment income yield came in at 5.16%.
Corporate expenses of $222 million pre-tax increased 1.8% sequentially.
Total expenses decreased 51.3% year over year to $2 billion on lower interest expense on debt, a decrease in policy-holder benefits and claims, and decreased amortization of deferred acquisition costs (DAC) and value of business acquired (VOBA).
Quarterly Segment Update
Annuities’ adjusted operating income of $385 million decreased 0.5% year over year, reflecting higher net investment income and fees partially offset by higher expenses, higher reserves, and higher DAC amortization. Annuity sales increased 1% year over year driven by record sales of variable and Shield Level annuities, which increased a combined 54% primarily offset by lower sales of fixed-rate annuities.
Life generated adjusted operating income of $110 million, up 44.7% year over year. The results indicate higher net investment income, partially offset by a lower underwriting margin. Life sales surged 108% year over year, driven by sales of SmartCare.
The Run-off segment reported adjusted earnings of $38 million, which was against the prior-year quarter’s adjusted loss of $1.1 billion. The results reflect higher net investment income partially offset by a lower underwriting margin.
Adjusted operating loss at Corporate & Other was $83 million, which was wider than the loss of $13 million incurred in the year-ago quarter. The wider loss reflects a lower tax benefit.
Financial Update
As of Sep 30, 2021, cash and cash equivalents were $4.1 billion, down 33.6% year over year.
Shareholders’ equity of $16 billion at third quarter-end decreased 12.2% year over year.
Book value per share, excluding accumulated other comprehensive income was $128.24 as of Sep 30, 2021, down 3.2% year over year.
Share Buyback Program
In the third quarter, Brighthouse Financial repurchased shares worth $149 million with an additional $61 million of shares repurchased on a trade-date basis through Nov 2, 2021.
Zacks Rank
Brighthouse Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Insurers
Of the insurance industry players, which have reported third-quarter results so far, earnings of Athene Holding Ltd. , American Financial Group (AFG - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) beat the respective Zacks Consensus Estimate.