Brighthouse Financial, Inc.

Good morning, ladies and gentlemen, and welcome to Bright House Financial's first quarter 2024 earnings conference call. My name is Norma, and I'll 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, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Dana Amante, Head of Investor Relations. Ms. Amante, you may proceed.

Thank you and good morning. Welcome to Bright House Financial's first quarter 2024 earnings call. Material 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 discussions are Miles Lambert, our Chief Distribution and Marketing Officer, David Rosenbaum, Head of Product and Underwriting, and John Rosenthal, our Chief Investment Officer. 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 risks and uncertainties described from time to time in Bright House Financial's filings with the SEC. Information discussed on today's call speaks only as of today, May 8, 2024. 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 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. Good morning, and thank you to everyone for joining today's call. Bright House Financial's first quarter results demonstrate the steady execution of our strategy. During the quarter, we maintained a strong balance sheet, continued to focus on executing our growth strategy, and sustained a disciplined approach to expense management. As you've heard us say in the past, the strength of our balance sheet is essential to support our distribution franchise, and we continue to focus on prudent financial and risk management. We ended the first quarter with $1.3 billion of liquid assets at the holding company. and an estimated risk-based capital, or RBC, ratio between 415% and 435%, which is in the middle of our target range of 400% to 450% in normal markets. Our strong RBC ratio and robust holding company liquid assets support our ability to consistently return capital to shareholders through our common stock repurchase program. In the first quarter of 2024, we returned $62 million of capital to shareholders through repurchases of our common stock. Since we began our common stock repurchase program in 2018, Through the first quarter of 2024, we have reduced shares outstanding by just short of 50%. We remain committed to returning capital to our shareholders and, through May 3rd, have repurchased an additional $27 million of common stock. Now, I would like to take a moment to talk about the success of our distribution franchise. The execution of our growth strategy is focused on providing a complementary suite of annuity and life insurance products designed to help people achieve financial security. I am very pleased with our first quarter 2024 annuity sales, especially with the continued steady growth in our Shield annuity product suite as we remain a leader in the registered index-linked annuity or RILA market. Our total SHIELD annuity sales were $1.9 billion for the first quarter of 2024, a 2% increase sequentially, and a 20% increase compared with the first quarter of 2023. Additionally, we are very pleased with our fixed indexed annuity, or FIA, sales, with $191 million of total FIA sales in the first quarter, driven by our secure key product. As I mentioned on our fourth quarter call, in November of 2023, we launched our new FIA Secure Key, expanding our distribution footprint in the fixed indexed annuity market. Fixed deferred annuities were also a strong driver of total annuity sales in the first quarter, with $637 million of sales. This is down from the fourth quarter of 2023, as expected, Overall, our annuity sales totaled $2.9 billion in the first quarter, an increase of 5% sequentially and 3% compared with the first quarter of 2023. These strong annuity sales results demonstrate the strength and complimentary nature of Bright House Financial's annuity product portfolio. First quarter annuity net outflows were approximately $1.5 billion. As we discussed last quarter, annuity outflows were elevated in 2023, given the interest rate environment, coupled with business coming out of the surrender charge period. And we expected elevated surrenders in 2024. That was the case for the first quarter, with outflows in line with the fourth quarter of 2023, partially offset by continued strong annuity sales. Over the last several years, The combination of our steady annuity sales growth and the outflows of legacy business has led to a meaningful shift in our business mix away from the legacy block of higher capital-intensive business to more spread-based, less capital-intensive business. On an account value basis, spread-based business made up roughly 15% of our annuity product mix in 2016 and approximately 40% at the end of 2023, and is expected to make up approximately 55% by the end of 2027. In the past, we have talked about our Shield business as a natural offset to the equity risk on our legacy VA business. With the growth we have seen with Shield sales, which has helped drive the significant shift in business mix, we have now achieved a point of balance for equity market risk. This demonstrates the success of our core strategy to diversify away from our legacy block of business. Turning to life insurance sales, we continue to see steady sales in our life insurance product suite with $29 million in the first quarter, a 26% increase compared with the first quarter of 2023. Overall, our first quarter sales results were a strong start to the year. And I am especially pleased that on April 24th, We joined BlackRock in announcing that BlackRock's LifePath Paycheck is now available in defined contribution plans. LifePath Paycheck offers U.S. workers an opportunity to access a guaranteed income stream in retirement. This solution is a target date strategy that will, over time, include an allocation to innovative annuity contracts to be issued by Bright House Financial and another selected insurer. This is a significant breakthrough for the industry, and it's exciting to see plan participants already beginning to take advantage of this solution. As I mentioned last quarter, BlackRock is currently working with 14 plan sponsors to implement Life Path Paycheck as an investment option for their employee's defined contribution plan. These 14 plan sponsors with plans totaling $27 billion in target date assets, are planning to make this solution available to over 500,000 employees. As a company whose mission is to help people achieve financial security, Bright House is pleased to assist even more Americans with preparing for retirement through LifePath Paycheck, and we are excited to work with BlackRock on this solution. In supporting our distribution franchise, Along with our focus on balance sheet strength, we recognize that maintaining a disciplined approach to expense management is extremely important. Our corporate expenses in the first quarter of 2024 were $207 million on a pre-tax basis, which was down 1% compared with the first quarter of 2023 and down 15% sequentially. First quarter expenses are typically lower, driven by seasonality. However, With our continued commitment to controlling expenses and realizing efficiency gains, we do expect 2024 full-year corporate expenses to be lower than 2023. We remain committed to executing on our growth strategy with continued growth in our Shield product suite, an expanded presence in the fixed indexed annuity market, and our entrance into the worksite channel through working with BlackRock on its LifePath Paycheck solution. Our focus remains on balance sheet strength and controlling expenses, and we continue to return capital to shareholders supported by our strong RBC ratio and robust holding company liquid assets. I will now turn the call over to Ed to discuss our first quarter financial results in some more detail.