Brighthouse Financial, Inc.

Welcome to the Pride House Financial. Good morning, ladies and gentlemen, and welcome to the Pride House Financial fourth quarter and full year 2022 earnings conference call. My name is Carmen. I'll be your coordinator for 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. I will now turn the presentation over to Dana Amante, Head of Investor Relations. Ms. Amante, you may proceed.

Thank you, Carmen, and good morning. Welcome to Bright House Financial's fourth quarter and full year 2022 earnings call. Materials for today's call were released last night and can be found 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 discussion are other members of senior management. Before we begin, I'd like to note that 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 the risks and uncertainties described from time to time in Bright House Financial's filing with the U.S. Securities and Exchange Commission. Information discussed on today's call speaks only as of today, February 10th, 2023. The company undertakes no obligation to update any information discussed on today's call. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliation 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, and 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 statement. And now I'll turn the call over to our CEO, Eric Stagerwald.

Thank you, Dana, and good morning, everyone. Bright House Financial's fourth quarter results were a strong finish to a successful year in which we maintained a robust capital and liquidity position, exceeded our total annuity sales expectations and continued to return capital to our shareholders through our common stock repurchase program. Before I provide comments on the fourth quarter results, I'd like to take a moment to reflect on the year. 2022 was a difficult year for markets with equity and fixed income indices down significantly amid continued high inflation. While market performance was a negative for separate account returns, our industry benefited from interest rates up over 230 basis points as measured by the 10-year U.S. Treasury. Despite the challenging environment, 2022 marked a year of significant milestones for Bright House Financial as we continued to execute on our strategy and remain disciplined in our financial and risk management. As I have said in the past, One of our top priorities is balance sheet strength, which we continue to display in 2022. As we communicated previously, in the rising interest rate environment earlier in 2022, we took the opportunity to add a substantial amount of low interest rate protection. We took additional actions through year end 2022 to further enhance our interest rate protection in our shift to a more strategic interest rate hedge positioning. These actions reflect our continued focus on protecting our balance sheet, optimizing our distributable earnings, and supporting the growth of our franchise through a broad range of market scenarios. We delivered another record year of annuity sales, with total annuity sales of $11.5 billion for full year 2022, up 26% compared with 2021. These strong results demonstrate the strength and complementary nature of our product suite. And in August of 2022, we launched a new annuity product, Bright House Shield Level Pay Plus, expanding our flagship Shield Level Annuity Suite. This product is specifically designed to help meet an important need in retirement planning. income that lasts for life. We are very pleased with the addition of this product to our suite of SHIELD annuities and remain focused on offering a portfolio of products that help meet the evolving needs of clients. Another significant milestone that we achieved in 2022 was the completion of all our major system conversions. This marks the full implementation of our future state operations and technology platform and the end of establishment costs. This accomplishment allows us to increase our focus on growth, the evolution of our business mix, and supporting our distribution franchise. These strategic and operational milestones have further enhanced the strong franchise that we have built at Bread House Financial. Additionally, In 2022, we returned capital to our shareholders through the repurchase of $488 million of common stock, which included $93 million of common stock repurchased in the fourth quarter. As of year end 2022, we have reduced the number of shares outstanding by 43% since we began our common stock repurchase program just over four years ago in August of 2018. I'm incredibly proud of all that we achieved in 2022. I would once again like to thank our employees for their hard work and dedication. And I would also like to thank our distribution partners for the important role that they play in our success. Now, moving to fourth quarter results. Our balance sheet and liquidity remained strong in the fourth quarter. We estimate our combined risk-based capital or RBC ratio was approximately 440% at year end. This is at the high end of our target RBC ratio range of 400 to 450% in normal markets. Additionally, we ended the year with $1 billion of holding company liquid assets. As I mentioned earlier, full year 2022 was a record year for annuity sales, and the fourth quarter was a strong contributor with total annuity sales of $3.2 billion. an increase of 36% compared with the fourth quarter of 2021. In the fourth quarter of 2022, we continued to see strong sales of our fixed deferred annuity and shield annuity products as our complimentary annuity product suite continues to meet the needs of our distributors and their clients in different market environments. As we sell the products that we offer today, offer product enhancements, and launch new products while continuing to run off our older, less profitable business, we expect our business mix to continue to evolve to a higher cash flow generating and less capital intensive business. Turning to life insurance, in the fourth quarter, we generated $22 million of life insurance sales. Though life insurance sales were down year over year, Reflecting the headwinds from the economic backdrop in 2022, we maintained a consistent level of life insurance sales throughout the year. Importantly, we remain confident in our life insurance strategy. In 2023, we plan to introduce a new life insurance product, which we expect will further diversify and strengthen our life product suite. and we will continue to focus on maintaining and enhancing our suite of life insurance products, as well as expanding our distribution footprint into the future. I am pleased with the results that we delivered in both the full year and the fourth quarter of 2022. We achieved significant strategic and operational milestones, and we believe that we are well positioned to continue to execute our focus strategy in 2023. We continue to prudently manage statutory capital and target a combined RBC ratio, as you know, of between 400 and 450 percent in normal markets. As I mentioned, in 2022, we took actions to move toward a more strategic position on interest rate risk, and we plan to continue to dynamically adjust our hedge portfolio to evolving market conditions. Regarding capital return, year to date through February 7th, we repurchased approximately $27 million of our common stock. We remain committed to returning capital to shareholders and intend to maintain an active and opportunistic share repurchase program. However, as we have demonstrated in uncertain market environments, we are focused on protecting our distribution franchise. To that end, while we continue to repurchase our common stock, we have reduced the level of buybacks to reflect a cautious view on both the market and economic environment. As I also mentioned, with the completion of our major system conversions in 2022, we can further increase our focus on growth, the evolution of our business mix and supporting our distribution franchise. To wrap up, Despite the challenging market environment in 2022, Bright House Financial delivered strong results. We maintained a robust capital and liquidity position, and we achieved several major strategic and operational milestones. We are looking forward to 2023 as the Bright House Financial franchise continues to grow and evolve to a more diversified company. With that, I will turn the call over to Ed to discuss the financial results.