Brighthouse Financial Inc., the annuity provider being spun off from MetLife Inc., is focusing on hedging risks in its $79 billion investment portfolio so that the company doesn't have to worry about making abrupt shifts in its holdings, the chief executive officer said.
"It's a sleep-at-night investment portfolio, so that when we make these guarantees, we know that we're going to be there when customers need us to pay off on our promises," Eric Steigerwalt said Friday in a phone interview. "We put products on the book that inherently have market sensitivity, and we hedge that market sensitivity to make sure that the company is protected always."
Steigerwalt was preparing for the independence of Brighthouse, an insurer with about $220 billion of assets that started regular trading on the Nasdaq Stock Market this morning. The business will focus on selling life insurance and annuities, retirement products where companies' results can fluctuate based on financial markets. While some newer companies in the annuity market, such as Athene Holding Ltd., have highlighted the complexity risk they seek to generate higher investment returns, Steigerwalt said he's focused on the safety of the portfolio as he seeks to attract financial advisers and new customers.
That involves moves to limit the risk that a stock plunge or credit crisis will widen liabilities. Rivals including Hartford Financial Services Group Inc. were burned by such losses in 2008 and 2009.
External Managers
Steigerwalt has tapped John Rosenthal, a longtime money manager at MetLife, to run Brighthouse's portfolio, which is predominantly in bonds. MetLife will help oversee the investments for a while after the separation, although Brighthouse said it could later use a group of external asset managers to help.
