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Brighthouse Financial (BHF) Q2 Earnings Miss, Revenues Top

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Brighthouse Financial Inc.'s (BHF - Free Report) second-quarter 2018 adjusted net income of $1.27 per share missed the Zacks Consensus Estimate of $2.03 by 37.4%.

Brighthouse Financial, Inc. Price, Consensus and EPS Surprise

Increase in corporate expenses and unfavorable results in the Run-off segment resulted in the underperformance.

Net loss came in at $2.01 per share in the reported quarter.

Behind the Headlines

Total revenues of $2.1 billion surpassed the Zacks Consensus Estimate by 1.1%. However, the top line dipped 0.7% year over year.

Premiums of $223 million increased 2.3% year over year. Annuity sales improved 42% year over year on increase in sales of Shield and fixed indexed annuities.Net investment income was $806 million in the reported quarter, up 5.2% year over year. The improvement was fueled by growth in assets and the ongoing repositioning of the investment portfolio, partially offset by lower alternative investment income.  Investment income yield was 4.4%.

Corporate expenses of $288 million pretax increased from $230 million pretax in the first quarter of 2018. Brighthouse Financial expects corporate expenses in the first year post-separation between $1 and $1.1 billion.

Total expenses rose 18.5% year over year on higher interest credited to policyholder account balances, Policyholder benefits plus claims and other expenses.

Quarterly Segment Update

Annuities reported adjusted operating income of $221 million, down 2.2% year over year on escalated expenses.

Life reported adjusted operating income of $37 million, skyrocketing 208% year over year. This improvement stemmed from better net investment income owing to portfolio realignment completed in the first quarter of 2018, partially offset by higher DAC amortization and higher expenses.

Adjusted operating loss in Run-off was $6 million on higher claims and reserve development plus lower net investment income against income of $52 million in the year-ago quarter.

Adjusted operating loss at Corporate & Other was $99 million due to lower net investment income and higher expenses versus $34 million income in the prior-year quarter.

Financial Update

Cash and cash equivalents were $2.1 billion, down 51.9% year over year.

Shareholders’ equity of $13.4 billion at the quarter-end decreased 18.2% year over year.

Book value per share was $105.37 as of Jun 30, 2018.

Guidance

Brighthouse Financial continues to estimate adjusted earnings per share between $8.50 and $9.00 in 2018. Adjusted return on equity is expected about 8%.

Share Buyback Program

Brighthouse Financial’s board of directors a $200-million worth repurchase of shares.

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 second-quarter earnings, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.

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