Brighthouse Increases Annuity Sales 26%

Brighthouse Financial Inc. says a new annuity it sells through another company, and an advertising campaign for its own Shield family annuities, led to a big increase in annuity sales in the fourth quarter of 2017.

The Charlotte, North Carolina-based company's sales of variable annuities and indexed annuities jumped to $1.3 billion, up from $980 million.

Sales of Shield family products increased to $794 million, from $456 million in the year-earlier quarter.

Sales of the Index Horizon contract, the new "white-label" indexed annuity, produced $203 million in sales.

(Related: What Brighthouse Told Investors About Distribution)

MetLife Inc. gave birth to Brighthouse this summer, by putting its individual life and annuity operations in Brighthouse and distributing shares of Brighthouse stock to its own shareholders.

Brighthouse posted the annuity sales figures when it released its earnings for the fourth quarter of 2017 and for all of 2017.

Earnings

Brighthouse is reporting $668 million in net income for the fourth quarter on $1.9 billion in revenue, compared with a net loss of 1.8 billion on $2.2 billion in operating revenue for the fourth quarter of 2016.

Because of the effects of net investment losses and net derivative losses, Brighthouse reported a total revenue figure of negative $553 million for the year-earlier quarter.

The effects of the new Tax Cuts and Jobs Act added $947 million to earnings in the latest quarter.

The company reported a $222 million loss before income taxes for the latest quarter, compared with a $2.8 billion loss before income taxes for the year-earlier quarter.

Annuities

MetLife sold its individual life and annuity retail distribution operation to Massachusetts Mutual Life Insurance Company before the Brighthouse spinoff took place. Brighthouse still has a 10-year distribution relationship with MassMutual, and MassMutual is the company selling the Index Horizon annuity.

Brighthouse held a conference call with securities analysts Tuesday to go over its latest results.

Eric Steigerwalt, the company's president, told analysts that the brand awareness campaign tied to the spinoff, and a campaign focused on the Shield annuities, helped Brighthouse hit the ground running.

"I believe our sales results this quarter reflect that momentum," Steigerwalt said.

Distributors that already have relationships with Brighthouse seem to be excited about those relationships, and other distributors are talking to Brighthouse about forming new relationships, Steigerwalt said.

Steigerwalt said Brighthouse is assuming 90% of the financial risk involved with the Index Horizon contract, and that MassMutual is offering the contract to more than 9,000 advisors.

"We plan to continue to offer new products that are simpler, more transparent and provide value to advisors, clients and our shareholders," Steigerwalt said. "We will continue to listen to feedback from our partners and make product updates that respond to the evolving needs of their businesses."

Life Insurance

Although MetLife helped build the modern U.S. life insurance market, and Brighthouse does sell life insurance, Brighthouse has been a relatively modest issuer of new life policies.

The company generated $2 million in sales of universal life products without secondary guarantees in the latest quarter, up from $1 million in the year-earlier quarter.

The company also sold $1 million in term life, but it sold little or no whole life or variable universal life during the latest quarter.

Overall life sales fell to $3 million, from $33 million in the fourth quarter of 2016.

In spite of the low level of new sales, whole life in force, net of reinsurance, increased to $3.8 billion, from $3.2 billion, and term life in force, net of reinsurance, increased to $342 billion, from $120 billion, mainly because of adjustments related to the MetLife spinoff.

Resources

Brighthouse has posted links to a collection of earnings-related documents, including a transcript of the analyst call, here.

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