Brighthouse Financial, Inc. (BHF) FY 2025 Earnings Call Transcript

Brighthouse Financial, Inc. (NASDAQ: BHF) FY 2025 Earnings Call dated Jun. 12, 2025

Corporate Participants:

Jacob Jenkelowitz — Corporate Secretary

Edward Chaplin — Chairman of the Board of Directors

Eric T. Steigerwalt — President and Chief Executive Officer

Presentation:

Jacob Jenkelowitz — Corporate Secretary

Good morning everyone. Thank you for joining us today for the annual meeting of stockholders of Bright House Financial, Inc. I am Jacob Jankowicz, the Corporate Secretary of Bright House Financial Inc. I am joined today by Chuck Chaplin, Chairman of the Board of Directors, each of the Director nominees and our senior Officers. Before we begin, I would like to state that our discussion during today’s meeting may include forward looking statements within the meaning of the of the federal securities laws. Brightoff’s Financial’s actual results may differ materially from the results anticipated in the forward looking statements as a result of risks and uncertainties described from time to time in our filings with the U.S.

securities and Exchange Commission. Information discussed at today’s meeting speaks only as of today, June 12, 2025 and Brighthouse undertakes no obligation to update any information during today’s meeting. During this meeting we may also discuss certain financial measures used by management that are not based on Generally Accepted Accounting Principles, also known as non GAAP measures. Reconciliations of these non GAAP measures on a historical basis to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website and in our filings with the sec. A recording of the Annual Meeting will be available to the public on our Annual Meeting website at www.virtualshareholdermeeting.com BHF2025 until our 2026 Annual Meeting of Stockholders, personal recording of the Annual Meeting is prohibited.

I am now going to turn the meeting over to Chuck Lakeside over the meeting. Mr. Chairman.

Edward Chaplin — Chairman of the Board of Directors

Thank you Jacob. The time is now 8:01am and I will call the meeting to order. In accordance with our bylaws, I will act as Chairman of the meeting and Jacob Jenkulowitz, our Corporate Secretary, will act as Secretary of the meeting and I will now turn the agenda back over to Jacob.

Jacob Jenkelowitz — Corporate Secretary

Thank you, Chuck. An agenda for this meeting has been posted to the Annual meeting website as you can see on the agenda. Following the presentation of the proposals for stockholder vote, we will entertain questions from stockholders with respect to the proposals. Following our CEOs presentation, we will address any general stockholder questions that are germane to this meeting. Stockholders may enter their questions in the dialog box that appears on your screen. We have posted to our website the procedures and rules of conduct for the meeting. And we ask all stockholders to abide by those rules. I will now turn it back to Chuck.

Edward Chaplin — Chairman of the Board of Directors

Now I will introduce the director nominees who are all in attendance and participating in this meeting. Steve Holey. Steve is the chair of the Audit Committee and also serves on the Investment Committee. Michael and Sarah. Michael serves on the Audit and Investment committees. Carol Jewell. Carol serves on the Audit and Investment committees. Eileen Mallish. Eileen is the chair of the Investment Committee and also serves on the Compensation in Human Capital and nominating and Corporate Governance committees. Diane Off Rhines. Diane is the chair of the Compensation and Human Capital Committee and also serves on the nominating and corporate governance and Finance and Risk committees.

Eric Steigerwald. Eric is our President and Chief Executive Officer and also a member of the board. Paul Wetzel. Paul is the chair of the Finance and Risk Committee and also serves on the compensation and Human capital and nominating and Corporate Governance committees. Elizabeth Slatkis. Elizabeth serves on the Audit and Finance and Risk committees. More detailed information about each of our directors is included in your proxy materials. So now I will introduce the senior executives of Brighthouse Financial, Inc. In attendance today. David Dooley, Executive Vice President and Head of Enterprise operations. Shelly Hemler, Executive Vice President and Chief officer. Jeff Hughes, Executive Vice President and Chief Technology officer. Vonda Huss, Executive Vice President and Chief Human Resources Officer. Miles Lambert, Executive Vice President and Chief Distribution and Marketing officer. Ali Lynn, Executive Vice President and General counsel. Phil Melville, Executive Vice President and Chief Risk officer. David Rosenbaums, Executive Vice President and head of Product and underwriting. John Rosenthal, Executive Vice President and Chief Investment officer and last but not least, Ed Spihar, Executive Vice President and Chief Financial Officer. Also attending this meeting is Eugene Gelling of Deloitte and Touche llp, our independent accounting firm.

Although Deloitte has indicated that it does not wish to make a statement, Eugene is available to respond to appropriate questions during the general question and answer period. So now, Jacob, back to you.

Jacob Jenkelowitz — Corporate Secretary

I’ll now report on a few meeting formalities. Victor Letessa of Broadridge Financial Solutions Inc. Is serving as the inspector of the election for this meeting. Vic has taken his oath as inspector of election. I confirm that Broadridge Financial Solutions, Inc. Has provided us with an affidavit attesting that the mailing of the notice of this meeting to Stockholders commenced on April 29, 2025. The affidavit has been filed with the records of the company. I also confirmed that the list of Stockholders as of April 14, 2025. The Record Date for this meeting was made available for inspection by stockholders in accordance with Delaware law.

The holders of the majority of the shares outstanding at the record date are present either by participation in this annual meeting or by proxy, and accordingly, a quorum is present at this meeting. Chuck, back to you.

Edward Chaplin — Chairman of the Board of Directors

Thank you, Jacob. We’ll now turn to the agenda for the meeting. There are four proposals presented for stockholder vote. Each of the proposals is described in detail in the proxy materials that were provided to stockholders. We will present all of the proposals following which stockholders will have an opportunity to ask questions via the online portal. We’ll also address any general questions after we complete the official business of the meeting. I now declare the polls open. Jacob, would you please review the proposals for action at the annual meeting and then provide the preliminary vote results?

Jacob Jenkelowitz — Corporate Secretary

Thank you, Chuck. The first item of business is proposal one, the election of the following nine directors, each to serve for one year term, expiring at the 2026 annual meeting. Chuck Chaplin, Steve Hooley, Michael and Sarah, Carol Jewell, Eileen Mallish, Diane Offerings, Eric Steigerwald, Paul Wetzel and Elizabeth Slackis. The Board of Directors has recommended that stockholders vote for each of the nine nominees. The next item of business is Proposal 2, the ratification of the appointment of Deloitte and Touche LLP as Bright House as independent registered public accounting firm for fiscal year 2025. Board of directors has recommended that stockholders vote for this proposal.

The next item of business is Proposal 3, an advisory vote to approve the compensation paid to Brighthouse’s named executive officers, which we refer to as the, say, unpaid vote. The Board of Directors has recommended that stockholders vote for this proposal. The next item of business is Proposal four, the approval of the amended and restated BrightHouse Financial, Inc. 2017 Stock and Incentive compensation plan. The Board of Directors has recommended that stockholders vote for this proposal. I have one question relating to one of the proposals and I will read that and then ask Chuck to respond to it.

The question reads as follows. I voted against the increase of the compensation for the officers. Nothing against them or their performance. In March 2024, the officers received a 125 to 210% increase in compensation. Where the average American is lucky to receive 3.5% and COLA only allowed 2.5% for 2025. For senior citizens, when the cost of living is much higher, the buying power of today’s dollar is much less than it was five years ago. So the average American is making less today. The CEOs and officers in any company this 2025 year should not increase at all until the American market gets under control.

For the American citizens, the disparity between the upper and lower incomes is getting greater. Middle income needs to increase to a much higher rate to stable out the American economy. Once this happens, then you can honestly look at compensation increases for the work each of you do. Chuck.

Edward Chaplin — Chairman of the Board of Directors

Yeah. Thank you for your question. As a preliminary matter, I’d like to note that the specific percentage increases that you mentioned in the question did not reflect the actual or target year over year changes as described on pages 37 to 51 of our 2025 proxy statement that were awarded to our named executive officers for 2024 compensation. If that is what the question is referring to. For more information on 2024 named executive officer compensation, I would refer you to those pages in the proxy statement. We believe that the compensation of our named executive officers is consistent with our objective to attract and retain our talent and we’re committed to building a compensation program with strong governance and that reflect best practices in the market and are responsive to stockholder feedback.

The proxy statement describes our compensation programs and policies including how we generally target compensation to the market median and our benchmarking practices and pay for performance compensation philosophy that’s intended to directly align the interest and incentives of our named executive officers with achievement of the company’s short and long term business goals. As discussed in the proxy statement, the vast majority of our named executive officers target total direct compensation is in the form of variable at risk elements that reward our executives only if we achieve. Performance goals that we believe are linked. To long term value creation. The board believes that our compensation program continues to align with stockholder interests.

Jacob Jenkelowitz — Corporate Secretary

Thank you, Chuck. I do not see any additional questions relating to the proposals. Polls are about to close, so if. You have not yet voted, please do so. I will allow you 60 seconds to get in your votes and then we will continue. All right, Chuck.

Edward Chaplin — Chairman of the Board of Directors

Great. Thank you, Jacob. The time now is 8:12am and I declare the polls close. Jacob, at this time would you please present the preliminary report of the proxy vote?

Jacob Jenkelowitz — Corporate Secretary

According to the preliminary report of the vote that was provided to me by the Inspector of Election, all proposals have passed in accordance with the recommendation of the Board of Directors. Specifically, each of the nine directors nominee Director nominees have been elected and proposals two, three and four have been approved. The final vote totals will be included in a Form 8K that we will file with the SEC within four business days following today’s meeting.

Edward Chaplin — Chairman of the Board of Directors

The matters for a vote of the stockholders are now concluded. So at this time I’ll invite our president, CEO and fellow board member Eric Steigerwald to address the meeting. After Eric concludes his remarks, we’ll address any stockholder questions that were received through the online portal. Eric?

Eric T. Steigerwalt — President and Chief Executive Officer

Thank you. Chuck Good morning everyone and thank you all for joining today. At this time, I’ll provide a brief overview of Brighthouse Financial’s performance in 2024. In 24 we continued to execute our focused strategy and I’m pleased with our achievements in the year. However, we also experienced some challenges and delivered statutory results that did not meet our expectations. First, let me touch on some of our key achievements. In 2024, we maintained a robust level of holding company liquid assets, ending the year with holding company liquid assets of $1.1 billion pro forma for a $100 million capital contribution from our holding company to Bright House Life Insurance Company or Blic, made.

Subsequent to December 31, 2024, our holding company liquid assets continued to be strong at $1 billion. I’ll discuss this capital contribution a little. Bit more in a moment. We also continue to return capital to our stockholders through the repurchase of our common stock for the full year. We repurchased $250 million of our common stock, reducing outstanding shares relative to year end 2023 by approximately 8% as of year end 2024. We have reduced the number of our common shares outstanding by more than 50% since we began our common stock repurchase program in August of 2018. Turning to sales, we delivered another year of record sales of our flagship Shield Level Annuities product suite. Shield sales totaled $7.7 billion in the full year, an increase of 12% year over year.

Our full year total annuity sales were also strong at $10 billion, although total annuity sales were down 5% year over year. This decrease was primarily driven by lower sales of fixed deferred annuities, which we expected given our transition in mid year 2024 to a new reinsurer for this product. We also delivered strong growth in fixed index annuities or FIA sales in 2024. Our full year FIA sales increased 72% year over year driven by sales of Brighthouse Secure Key fixed indexed annuities, which we launched in 2023. Our life insurance sales totaled a record $120 million in 2024, an increase of 18% year over year.

Also in 2024, we joined BlackRock in announcing the availability of of BlackRock’s LifePath Paycheck retirement solution in defined contribution plans and we received our first deposits from this solution. As I have said before, we could not be more excited to be working with BlackRock on LifePath Paycheck and in doing so helping even more people achieve financial security in retirement. Moving on, we remain committed to disciplined expense management which continues to be a core element of our focus strategy. In 2024 we reported our lowest ever full year corporate expenses which decreased 7% compared with full year 2023.

Now, as I said, in 2024 we also experienced some challenges that resulted in statutory results that were below our expectations. However, we have made significant progress against several several strategic initiatives designed to improve capital efficiency, unlock capital and remain within our target combined risk based capital or RBC ratio range in normal market conditions. This progress includes fully transitioning to as of the end of 24 to hedging shield annuity new business on a standalone basis. As part of our efforts to simplify our VA and SHIELD hedging strategy, we also continue to develop a separate hedging strategy for our in force va and our first generation shield book of business.

As we mentioned on our first quarter 2025 earnings call, we expect to complete the transition to our revised strategy for this legacy block of business before year end. Further effective as of September 30, 2024, we completed a reinsurance transaction with a third party to reinsure a legacy block of our fixed and payout annuities. In addition, in the fourth quarter of 2024 we entered into an additional reinsurance transaction with a third party to reinsure a legacy block of universal life and variable universal life products residing within our life insurance segment. As of year end 2024, our combined risk based capital or RBC ratio was 402% which was at the low end of our target range of 400 to 450% in normal market conditions.

Our year end 2024 combined RBC ratio reflects the $100 million capital contribution to BLIC that I mentioned earlier. Given the importance of the financial strength of our operating companies in supporting our distribution franchise, we determined that it was prudent to make this contribution to blic, which is our largest operating subsidiary. I am pleased with the progress that we have made against our capital focused strategic initiatives which we continue to focus on executing. In closing, I’m proud of our achievements in 2024 and remain excited about what the future holds for our company. Thank you to all our stockholders for your investment and continuing support of brighthouse Financial.

Jacob Jenkelowitz — Corporate Secretary

Thank you Eric. I will now open the meeting for stockholder questions. Please follow the procedures noted on the stockholder portal.

Edward Chaplin — Chairman of the Board of Directors

Are there any questions?

Jacob Jenkelowitz — Corporate Secretary

We have one question received during the meeting. I’ll read that and direct it to Eric. Question is, will dividends be paid to shareholders?

Eric T. Steigerwalt — President and Chief Executive Officer

Okay. As we mentioned in our annual report to Stockholders on Form 10K for the year ended December 31, 2024, we currently have no plans to declare and pay cash dividends on our common stock. Any future declaration and payment of dividends will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, cash needs, regulatory constraints, capital requirements, and any other factors that the board deems relevant in making such a determination.

Jacob Jenkelowitz — Corporate Secretary

We have responded to each of the questions received prior to and during the meeting. So this concludes the question and answer portion of the meeting.

Edward Chaplin — Chairman of the Board of Directors

Thank you, Jacob. With that, and on behalf of the board of directors, I want to thank all of you for attending this annual meeting. The meeting is now adjourned.

operator

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.