Shares of Brighthouse Financial (BHF), which spun-off from Metlife (MET) in 2017, touched an all-time low of $40.22 on Wednesday as investors remained cautious about the company’s negative fundamentals. The life insurance and annuity services provider’s stock is currently trading down 0.57% in the premarket session, hinting the stock is losing its shine and going deep on the ground.
In addition, traders and investors are hesitating to invest in Brighthouse as the chance of a short-term return is not that much great. The market analysts are expecting the long-term prospects to be quite a bit better than the short-term as securities have been many of the best investments.
Risk management remained the primary criteria for all insurance companies and market analysts believe Brighthouse needs to take steps to manage the risk. Also, the company expects that over the next three to four years, there is a good opportunity to significantly lowering hedging costs after incurring roughly $1.6 billion per year to hedge its variable annuity book.
In the recently-completed first-quarter, Brighthouse posted a narrower loss helped by strong segment results. Annuity sales grew 35% on higher sales of Shield and fixed indexed annuities. During the quarter, lower net derivative investment income hurt net investment income.
Life insurance sales were down for the quarter, consistent with the company’s strategy of migrating to simpler services. Brighthouse expects life insurance sales to remain at similar levels over the medium term as it revamps its life insurance business.
Traders and investors are hesitating to invest in Brighthouse as the chance of a short-term return are not that much great.
As of March 31, 2018, the company liquidated stocks and bonds fairly quickly into cash as can be seen from the 72% dip in the short-term investments. Brighthouse spends cash more than last year as can be known from a 68% drop in cash and cash equivalents. In addition, the company’s long-term debt had climbed considerably by 347%, while deferred income tax liability plunged 69% from last year.
During last week, Brighthouse and Metlife have been sued for failing to pay at least $500 million in retirement benefits to thousands of pension plan participants over the past 2-and-a-half decades. Metlife stated that it was able to reach the participants for paying the benefits.
Most of the analysts are maintaining a “hold” rating on the stock. For the next five years, the market analysts are predicting a 6.02% per annum in growth.
Shares of Brighthouse ended Wednesday’s regular trading session down 5.30% at $40.23 on the Nasdaq. The stock had been trading between $40.22 and $75 for the past 52 weeks.