Brighthouse Financial, Inc.

Good morning, ladies and gentlemen, and welcome to Bright House Financial's fourth quarter and full year 2021 earnings conference call. My name is Shannon, and I will be your coordinator today. At this time, all participants are in a listen-only mode. We will facilitate a question and answer session towards the end of the conference call. In fairness to all participants, please limit yourself to one question and one follow-up. As a reminder, the conference is being recorded for replay purposes. Also, we ask that you refrain from using cell phones, speaker phones, or headsets during the question and answer portion of today's call. I would now like to turn the presentation over to Dana Amante, Head of Investor Relations. Ms. Amante, you may proceed.

Thank you. Good morning. Thank you for joining Bright House Financial's fourth quarter and full year 2021 earnings call. Our earnings release, slide presentation, and financial supplement were released last night and can be accessed on the investor relations section of our website. We encourage you to review all of these materials. Today, you will hear from Eric Stagerwald, our President and Chief Executive Officer, and Ed Spihar, our Chief Financial Officer. Following our prepared remarks, we will open the call up for a question and answer period. also here with us today to participate in the discussions are other members of senior management. Our discussion during this call may include forward-looking statements within the meaning of the federal securities laws. Bright House Financial's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties described from time to time in Bright House Financial's filings with the U.S. Securities and Exchange Commission. Information discussed on today's call speaks only as of today, February 11, 2022. The company undertakes no obligations to update any information discussed on today's call. During this call, we will be discussing certain financial measures used by management that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures on a historical basis to the most directly comparable GAAP measures and related definitions may be found on the investor relations portion of our website in our earnings release, slide presentation, or financial supplement. And finally, references to statutory results, including certain statutory-based measures used by management, are preliminary due to the timing of the filing of the statutory statements. And now I'll turn the call over to our CEO, Eric Steigerwald.

Thank you, Dana. Good morning, everyone, and thank you all for joining us. I am pleased to share that 2021 was another strong year for Bright House Financial. Despite the challenges resulting from the COVID-19 pandemic, we remain steadfastly focused on our mission and strategy and on delivering for our customers, partners, and shareholders. Thanks to the tremendous dedication of our employees, we accomplished many important strategic milestones in 2021, including we achieved our target of returning $1.5 billion to our shareholders by the end of 2021. As a result, we have reduced the number of shares outstanding relative to when we became an independent public company in 2017 by 35%. That includes $499 million of our common stock that we repurchased in 2021, representing a reduction of 12% of shares outstanding relative to year-end 2020. We continued to optimize statutory capital to further strengthen the balance sheet and paid subsidiary ordinary dividends totaling $594 million to the holding company, primarily consisting of $550 million from Bright House Life Insurance Company, or BLIC. Sales of both annuities and life insurance were very strong throughout the year. In each of the first three quarters of 2021, we delivered record sales for both our flagship SHIELD-level annuities and our variable annuities with FlexChoice access. The strong sales continued in the fourth quarter resulting in a record year of total annuity sales in 2021. Life insurance sales grew steadily throughout the year and were ahead of our expectations. We continued to expand our distribution footprint and enhance the way we support financial professionals and the clients they serve. During the year, we added new distribution relationships, including the addition of our annuities to the Simon Marketplace. We also added more life insurance wholesalers, rolled out smart care to more firms, selectively expanded into the brokerage general agency or BGA distribution channel, and rolled out enhancements to our shield-level annuities and smart care. We launched our institutional spread margin business, which we expect will enhance and diversify our earnings profile over time. We achieved almost 90 percent of our run rate expense reduction relative to the first year post-separation, while simultaneously making strategic investments in 2021 to start up the institutional spread margin business and fund future growth. Some of these investments allowed us to provide better support to our distributors and their financial professionals, as well as our policyholders and contract holders. And finally, we completed a major platform conversion as we continued our efforts to implement our future state operations and technology platform. Turning to our fourth quarter results, our balance sheet and liquidity position remained robust in the fourth quarter, and we estimate our combined risk-based capital, or RBC, ratio was approximately 500%. Additionally, we ended the year with holding company liquid assets of $1.6 billion. Bright House delivered strong sales results in the fourth quarter. Annuity sales were $2.4 billion, driven by variable annuity and Shield product sales of $2 billion combined. Total VA and Shield sales were up 14% compared with the fourth quarter of 2020. Fixed-rate annuity sales were lower quarter-over-quarter, as expected. As I have mentioned previously, we took repricing actions in the second half of 2020, given the low interest rate environment. Additionally, we generated approximately $35 million of life insurance sales in the fourth quarter of 2021, an increase of 133% compared with the fourth quarter of 2020, and an increase of 30% compared with the third quarter of 2021. As I said, we delivered steady growth in life insurance sales in 2021, which is a result of the focus and execution on our life insurance strategy, including the addition of new distribution partners and bringing on additional wholesalers. We couldn't be more pleased with our sales results last year. Before moving to expenses, I would like to thank our distribution partners for all they do on behalf of their clients and our customers every day. Now turning to expenses. Corporate expenses, which do not include establishment costs, were $247 million before tax in the fourth quarter. Establishment costs were approximately $27 million before tax. I am pleased with the results for both the full year and fourth quarter of 2021. We have made significant progress in 2021, and we believe we remain well-positioned to continue to execute on our focus strategy in 2022. We continue to prudently manage statutory capital and target a combined RBC ratio of between 400 and 450 percent in normal markets. In addition, Our business mix will continue to evolve by adding more high-quality new business. We expect to see a continued shift in our business mix profile over time as we add more higher cash flow generating and less capital intensive business, coupled with the runoff of older, less profitable business. As we enhance our existing products, develop new ones, and expand our distribution reach, we expect to see continued sales growth across annuities and life insurance. And we remain very excited about being one of two annuity providers selected to help deliver BlackRock's Lifepath Paycheck, an investment solution that is designed to provide millions of American workers with simplified access to lifetime income throughout their retirement. We have significantly reduced corporate expenses and we plan to continue to manage expenses effectively to drive our statutory expense ratio down over time. Additionally, we will continue to prudently manage the exit of the remaining transition services agreements as we implement our future state operations and technology platform. We expect the remaining establishment costs to occur in 2022. Lastly, We intend to continue to deliver on our ongoing commitment to return capital to our shareholders. Year-to-date through February 8th of this year, we have repurchased $57 million of our common stock. To wrap up, Bright House Financial made significant progress in 2021. We continue to believe that we have the right strategy in place, and we remain focused and well-positioned to continue the execution of our strategy. As the Bright House Financial franchise grows and evolves to include a more diversified business mix, we are committed to consistently driving shareholder value. With that, I will turn the call over to Ed to discuss financial results.