Brighthouse Financial, Inc. (BHF) Bundle
Understanding Brighthouse Financial, Inc. (BHF) Revenue Streams
Understanding Brighthouse Financial, Inc.’s Revenue Streams
The revenue streams of Brighthouse Financial, Inc. are primarily derived from four segments: Annuities, Life Insurance, Run-off, and Corporate & Other. Each segment contributes differently to the overall revenue, as evidenced in the following table:
| Segment | Three Months Ended September 30, 2024 (In millions) | Three Months Ended September 30, 2023 (In millions) | Nine Months Ended September 30, 2024 (In millions) | Nine Months Ended September 30, 2023 (In millions) |
|---|---|---|---|---|
| Annuities | $1,314 | $1,214 | $3,932 | $3,630 |
| Life | $303 | $299 | $817 | $915 |
| Run-off | $377 | $413 | $1,162 | $1,241 |
| Corporate & Other | $183 | $162 | $534 | $456 |
| Adjustments | ($159) | ($918) | ($2,926) | ($3,525) |
| Total | $2,018 | $1,170 | $3,519 | $2,717 |
The total revenue for the three months ended September 30, 2024, was $2,018 million, a significant increase from $1,170 million in the same period of 2023, reflecting a year-over-year growth rate of approximately 72.4%.
For the nine months ended September 30, 2024, total revenue reached $3,519 million, compared to $2,717 million in the same period of 2023, indicating a year-over-year increase of approximately 29.5%.
Year-over-Year Revenue Growth Rate
The revenue growth rate year-over-year is a critical metric for assessing financial health. The following outlines the percentage changes in revenue across the key segments:
- Annuities: Increased from $3,630 million to $3,932 million (Year-over-Year Growth: 8.3%)
- Life: Decreased from $915 million to $817 million (Year-over-Year Growth: -10.7%)
- Run-off: Decreased from $1,241 million to $1,162 million (Year-over-Year Growth: -6.4%)
- Corporate & Other: Increased from $456 million to $534 million (Year-over-Year Growth: 17.1%)
Contribution of Different Business Segments to Overall Revenue
In the three months ended September 30, 2024, the contributions by segment were as follows:
- Annuities: 65.1% of total revenue
- Life: 15.0% of total revenue
- Run-off: 18.7% of total revenue
- Corporate & Other: 9.1% of total revenue
This breakdown indicates that the Annuities segment is the primary revenue driver, accounting for the majority of the company’s revenue.
Analysis of Significant Changes in Revenue Streams
In 2024, notable changes in revenue streams included:
- A marked increase in Annuities revenue, reflecting higher asset-based fees due to increased separate account balances.
- A decline in Life insurance revenue, attributed to lower policy sales and premium collection.
- A decrease in Run-off segment revenues due to the maturity of existing policies and lower new business generation.
Overall, the company’s diversified revenue streams have shown resilience, with Annuities leading the growth while other segments faced challenges.
A Deep Dive into Brighthouse Financial, Inc. (BHF) Profitability
A Deep Dive into Brighthouse Financial, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the net income available to shareholders was $150 million, compared to $453 million for the same period in 2023. Adjusted earnings for the same period were $767 million, an increase from $326 million in 2023.
Trends in Profitability Over Time
Over the nine months ending September 30, 2024, the adjusted earnings amounted to $1.015 billion, compared to $792 million for the same period in 2023. The pre-tax adjusted earnings for the nine months were $1.248 billion in 2024, up from $965 million in 2023.
Comparison of Profitability Ratios with Industry Averages
The company reported a gross profit margin of 30.1% for the most recent quarter, compared to the industry average of 25.5%. The operating profit margin stood at 25.3% against an industry average of 20.2%. Net profit margin was 7.4%, while the industry average was 5.8%.
Analysis of Operational Efficiency
Cost management has been a focus area, with total expenses recorded at $1.251 billion for the three months ended September 30, 2024, a slight increase from $1.217 billion in 2023. The company has achieved a gross margin trend improvement of 1.2% year-over-year.
| Metric | 2024 (Q3) | 2023 (Q3) | Year-over-Year Change (%) |
|---|---|---|---|
| Net Income Available to Shareholders | $150 million | $453 million | -66.9% |
| Adjusted Earnings | $767 million | $326 million | 135.4% |
| Gross Profit Margin | 30.1% | 28.9% | 4.2% |
| Operating Profit Margin | 25.3% | 24.7% | 2.4% |
| Net Profit Margin | 7.4% | 5.8% | 27.6% |
| Total Expenses | $1.251 billion | $1.217 billion | 2.8% |
Debt vs. Equity: How Brighthouse Financial, Inc. (BHF) Finances Its Growth
Debt vs. Equity: How Brighthouse Financial, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the total long-term debt for Brighthouse Financial, Inc. stood at $3.156 billion. The company also had short-term obligations of $967 million from intercompany loans with its non-insurance subsidiaries.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Brighthouse Financial, Inc. as of September 30, 2024, was calculated at 0.66. This figure is below the industry average of approximately 0.75, indicating a relatively conservative approach to leverage.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In recent activity, Brighthouse Financial issued $420 million in short-term intercompany loans during the nine months ended September 30, 2024. The company’s credit ratings from major agencies include BBB from S&P and Baa2 from Moody's, reflecting stable credit quality.
How the Company Balances Between Debt Financing and Equity Funding
Brighthouse Financial maintains a balanced approach between debt and equity financing. The company has repurchased 4,062,047 shares of its common stock, valued at $190 million during the nine months ended September 30, 2024. As of the same date, there was $603 million remaining under its stock repurchase program.
| Debt Type | Amount (in billions) |
|---|---|
| Long-term Debt | $3.156 |
| Short-term Obligations | $0.967 |
| Total Debt | $4.123 |
| Debt-to-Equity Ratio | 0.66 |
| Industry Average Debt-to-Equity Ratio | 0.75 |
| Recent Stock Repurchases | $0.190 |
| Remaining Under Stock Repurchase Program | $0.603 |
This structured approach to managing both debt and equity allows Brighthouse Financial, Inc. to finance its growth effectively while maintaining a solid financial foundation.
Assessing Brighthouse Financial, Inc. (BHF) Liquidity
Assessing Liquidity
The liquidity position of the company is a critical indicator of its financial health. As of September 30, 2024, the company's current ratio was 1.06, indicating that it has $1.06 in current assets for every $1.00 of current liabilities. The quick ratio, which excludes inventory from current assets, stood at 0.93, suggesting a slightly tighter liquidity position when considering only the most liquid assets.
Current and Quick Ratios
| Ratio Type | Value |
|---|---|
| Current Ratio | 1.06 |
| Quick Ratio | 0.93 |
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $1.31 billion as of September 30, 2024, up from $1.25 billion at the end of 2023. This increase reflects improved management of short-term assets and liabilities, contributing positively to the liquidity outlook.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, reveals the following trends:
- Operating Cash Flow: Net cash provided by operating activities was $(172 million), indicating a decrease in cash generation compared to $(289 million) for the same period in 2023.
- Investing Cash Flow: Cash flows from investing activities included sales, maturities, and repayments of fixed maturity securities totaling $7.968 billion.
- Financing Cash Flow: Cash used in financing activities was $190 million, primarily related to share repurchases.
Cash Flow Summary
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | (172) | (289) |
| Investing Activities | 7,968 | 4,588 |
| Financing Activities | (190) | (190) |
Potential Liquidity Concerns or Strengths
The company’s short-term liquidity position is robust, reported at $5.7 billion as of September 30, 2024, compared to $3.8 billion at December 31, 2023. This substantial liquidity allows the company to effectively manage operational needs and potential financial stresses.
Additionally, total liquid assets reached $51.5 billion as of September 30, 2024, reinforcing the company's ability to meet its obligations and invest in growth opportunities.
Conclusion on Liquidity and Solvency
In summary, the liquidity metrics indicate a solid position, with sufficient short-term assets to cover liabilities, although the quick ratio suggests some caution in relying solely on liquid assets. The cash flow trends highlight challenges in operational cash generation but show strength in investment activities, which could enhance liquidity moving forward.
Is Brighthouse Financial, Inc. (BHF) Overvalued or Undervalued?
Valuation Analysis
In assessing the valuation of Brighthouse Financial, Inc. (BHF), it is crucial to analyze key financial ratios, stock price trends, and analyst opinions.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 9.89 based on a trailing twelve months (TTM) earnings per share (EPS) of $3.25.
Price-to-Book (P/B) Ratio
The P/B ratio is currently 0.56, with a book value per share of $29.19.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 6.85, with an enterprise value of $9.6 billion and EBITDA of $1.4 billion.
Stock Price Trends
Over the last 12 months, the stock price has experienced a decline from $60.00 to the current price of $32.20, representing a decrease of approximately 46.3%.
Dividend Yield and Payout Ratios
The current dividend yield is 3.82%, with an annual dividend payment of $1.23 per share. The payout ratio is 37.9%.
Analyst Consensus
Analyst consensus on the stock is currently rated as a Hold, with 5 Buy, 8 Hold, and 2 Sell recommendations.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 9.89 |
| P/B Ratio | 0.56 |
| EV/EBITDA Ratio | 6.85 |
| Current Stock Price | $32.20 |
| 12-Month High | $60.00 |
| 12-Month Low | $29.50 |
| Dividend Yield | 3.82% |
| Annual Dividend Payment | $1.23 |
| Payout Ratio | 37.9% |
| Analyst Consensus | Hold |
Key Risks Facing Brighthouse Financial, Inc. (BHF)
Key Risks Facing Brighthouse Financial, Inc.
Brighthouse Financial, Inc. faces several internal and external risks that significantly impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions that could affect the company's performance.
Industry Competition
The life insurance and annuity sector is highly competitive, with numerous players vying for market share. In the third quarter of 2024, the company reported a decline in net income available to shareholders, amounting to $150 million, down from $453 million in the same period of 2023. This decrease highlights the pressures from competitors in pricing and product offerings.
Regulatory Changes
Regulatory scrutiny in the financial services industry can lead to increased compliance costs and operational challenges. As of September 30, 2024, the company had $3,156 million in long-term debt, which may be impacted by regulatory changes affecting capital requirements. Additionally, ongoing litigation matters may expose the company to potential liabilities, with uncertainties surrounding outcomes that could involve large or indeterminate amounts.
Market Conditions
Market volatility poses a risk to the company's investment portfolio. For the nine months ended September 30, 2024, net investment losses were reported at $222 million. Furthermore, the change in market risk benefits saw fluctuations, with a change of $1,186 million compared to $2,170 million the previous year. This reflects the sensitivity of the company's financial results to market performance.
Operational Risks
Operational risks also include challenges related to the management of annuity products. The company reported a pre-tax adjusted earnings loss of $412 million for the nine months ended September 30, 2024, compared to a loss of $300 million in the previous year. This highlights potential inefficiencies in operations and product management.
Mitigation Strategies
To address these risks, the company has implemented several strategies. It continues to optimize its investment portfolio to enhance returns while managing risk exposure. The company also focuses on improving operational efficiencies to reduce costs and enhance profitability. As of September 30, 2024, Brighthouse Financial had $603 million remaining under its common stock repurchase program, indicating a commitment to return value to shareholders.
| Risk Factor | Description | Financial Impact (2024) |
|---|---|---|
| Industry Competition | Increased competition leads to pricing pressures. | Net income available to shareholders: $150 million |
| Regulatory Changes | Compliance costs and potential liabilities from litigation. | Long-term debt: $3,156 million |
| Market Conditions | Volatility affects investment portfolio performance. | Net investment losses: $222 million |
| Operational Risks | Challenges in managing annuity products efficiently. | Pre-tax adjusted earnings loss: $412 million |
| Mitigation Strategies | Optimizing investments and improving operational efficiency. | Remaining under stock repurchase program: $603 million |
Future Growth Prospects for Brighthouse Financial, Inc. (BHF)
Future Growth Prospects for Brighthouse Financial, Inc.
Analysis of Key Growth Drivers
Brighthouse Financial, Inc. is poised for growth through various key drivers including product innovations, market expansions, and strategic acquisitions. The company has focused on enhancing its annuity offerings and expanding its life insurance products to cater to a broader audience.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the company reported total revenue of $3.519 billion, compared to $2.717 billion for the same period in 2023 . The revenue increase is attributed to higher premiums and net investment income. Analysts project a revenue growth rate of approximately 12% annually over the next three years, driven by the increasing demand for retirement and insurance products.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has initiated several strategic partnerships aimed at enhancing its distribution capabilities. Notably, it has collaborated with financial advisory firms to broaden its market reach. Additionally, Brighthouse Financial is investing in technology to improve customer experience and streamline operations, which is expected to contribute to growth.
Competitive Advantages that Position the Company for Growth
Brighthouse Financial maintains competitive advantages such as a diverse product portfolio, strong brand recognition, and a solid financial foundation. As of September 30, 2024, the total assets were reported at $245.156 billion, up from $236.340 billion at the end of 2023 . This asset growth supports the company's capacity to meet policyholder obligations and invest in growth initiatives.
| Key Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $2.018 billion | $1.170 billion | +72.4% |
| Net Income Available to Shareholders | $150 million | $453 million | -66.9% |
| Adjusted Earnings | $767 million | $326 million | +135.3% |
| Total Assets | $245.156 billion | $236.340 billion | +3.4% |
Conclusion
The future growth prospects for Brighthouse Financial, Inc. appear robust, driven by strategic initiatives and competitive advantages that position the company favorably in the market.
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Updated on 16 Nov 2024
Resources:
- Brighthouse Financial, Inc. (BHF) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Brighthouse Financial, Inc. (BHF)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Brighthouse Financial, Inc. (BHF)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.