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Brighthouse (BHF) Q1 Earnings and Revenues Beat Estimates

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Brighthouse Financial Inc.'s (BHF - Free Report) first-quarter 2020 adjusted net income of $2.60 per share surpassed the Zacks Consensus Estimate by 35.4%. Moreover, the bottom line improved 31.3% year over year.

Sales growth continued in Annuities and Life.

Behind the Headlines    

Operating revenues of $2.1 billion beat the Zacks Consensus Estimate by 5.5%. Moreover, the top line increased 4.8% year over year, driven by higher universal life and investment-type product policy fees, net investment income and other revenues.

Premiums of $198 million decreased 12.8% year over year.    

Adjusted net investment income was $920 million in the quarter under review, up 13.4% year over year. The improvement was driven by higher alternative investment income and asset growth. Investment income yield was 4.3%.

Corporate expenses of $214 million pretax decreased 24.4% year over year.

Total expenses increased 66.2% year over year to $2.7 billion, attributable to an increase in amortization of deferred acquisition costs and higher policyholder benefits & claims.

Brighthouse Financial Inc Price, Consensus and EPS Surprise

Quarterly Segmental Update

Annuities reported adjusted operating income of $316 million, up 7.1% year over year, reflecting lower amortization of deferred acquisition costs, lower expenses, and higher net investment income, partially offset by higher reserves. Annuity sales increased 15% to nearly $2 billion.

Life generated adjusted operating income of $11 million, down 56% year over year on higher DAC amortization and a lower underwriting margin, partially offset by lower expenses and higher net investment income. Life insurance sales were $16 million, which surged 1500% from prior-year sales of $1 million.

Adjusted operating loss at Run-off was $70 million, wider than $36 million loss incurred in the year-ago quarter, attributable to higher net investment income, partially offset by a lower underwriting margin and higher expenses.

Adjusted operating loss at Corporate & Other was $64 million, which was wider than the prior-year loss of $52 million.

Financial Update

The company’s cash and cash equivalents were $8.9 billion, up from $2.9 billion as on Dec 31, 2019.

Shareholders’ equity of $20.4 billion at the end of the quarter was up from $12.2 billion as on Dec 31, 2019.

Book value per share, excluding accumulated other comprehensive income (AOCI), was $172.28 as of Mar 31, 2020, up 55% year over year.

Statutory combined total adjusted capital on a preliminary basis decreased to $7.2 billion at first quarter end from $9.8 billion at 2019 end, attributable to equity market and interest rate declines, a $300 million ordinary subsidiary dividend paid to the holding company, and unfavorable non-variable annuity results.

As of Mar 31, 2020, estimated combined risk based capital ratio was between 515% and 535%.

Share Buyback Program

Brighthouse bought back shares worth $316 million through May 8. The company has temporarily suspended share buyback program.

Zacks Rank & Peer Releases

Brighthouse currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the insurance industry that have reported first-quarter earnings so far, the bottom line of Brown & Brown, Inc. (BRO - Free Report) beat the Zacks Consensus Estimate while that of RLI Corp. (RLI - Free Report) and Travelers Companies (TRV - Free Report) missed the same.

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