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Brighthouse's balance sheet prepared for low interest rates, say execs

Brighthouse Financial Inc. President and CEO Eric Steigerwalt said his company's balance sheet is "well protected" for a low interest rate environment.

Steigerwalt during a conference call to discuss second-quarter earnings said Brighthouse added interest rate protection during the first half of 2019 and is maintaining its $1.5 billion capital return target by 2021.

"Despite the low rate environment, we have generated more than $600 million of normalized statutory earnings, given the strong equity market performance in the first half of 2019," he said.

The company has "multiple levers" to achieve its capital return goal, mainly due to the capital positions of its subsidiaries.

Steigerwalt said plans are underway for Brighthouse Life Insurance Co. to send regular dividends to the holding company beginning in 2020, and excess capital could possibly be released from Brighthouse Reinsurance Co. of Delaware over time. New England Life Insurance Co. should continue to be a stable source of capital for the holding company, with management expecting the subsidiary to continue generating approximately $60 million to $70 million of dividend capacity annually over the next several years.

Elaborating on what options the company secured to protect its balance sheet from low interest rates, Steigerwalt said they are not "short-dated" options; they do not have 10-year durations but are longer than three months.

COO Conor Murphy said because implied interest rate volatility was at historically low levels in the first half, the company decided to increase its protection.

"So we're feeling pretty good," he said. "We believe we are well protected at this stage."

Brighthouse's annuity sales increased 34% quarter over quarter and 11% sequentially. Brighthouse logged second-quarter adjusted earnings of $254 million, or $2.19 per share, compared with $153 million, or $1.27 per share, in the prior-year period.