Brighthouse Financial, Inc.

Good morning, ladies and gentlemen, and welcome to the Bright House Financial Second Quarter 2024 Earnings Conference Call. My name is Victor, 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, the conference is being recorded for replay purposes. I want to hand the presentation over to Dana Amonte, head of investor relations. Ms. Amonte, you may proceed.

Thank you, and good morning. Welcome to Bright House Financial's second quarter 2024 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 discussions are Myles 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, August 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 statements. And now I'll turn the call over to our CEO, Eric Stagawalt.

Thank you, Dana. Good morning to everyone, and thank you for joining the call. While the second quarter had many positive developments, including record sales of our flagship SHIELD annuities, the first deposits received through BlackRock's Lifepath Paycheck, and strong adjusted earnings results, our preliminary statutory results were disappointing. Our estimated statutory combined risk-based capital, or RBC ratio, was between 380 and 400 percent, which is at or modestly below the low end of our target range of 400 percent to 450 percent in normal markets. I would like to provide a few perspectives on the change in statutory capital and our estimated RBC ratio. And Ed will provide more details during his prepared remarks. As we have said in the past, the financial and risk management strategy at Bright House was founded on maintaining a strong capital position at our life insurance companies, as defined by a target combined RBC ratio of between 400 and 450% normal market conditions, coupled with substantial liquidity at the holding company. In the second quarter, our capital and liquidity position remained strong, but the RBC ratio declined, driven by the underlying performance of our variable annuity, or VA, and SHIELD business, resulting in an approximately $600 million decline in statutory combined total adjusted capital. However, we have maintained a robust liquidity position with liquid assets at the holding company of $1.2 billion as of June 30th. While our capital and liquidity position remains strong, we are not pleased with our statutory results this year. To that end, we have been actively engaged in a number of specific initiatives, including reinsurance opportunities, which are designed to improve capital efficiency, unlock capital, and restore the RBC ratio to the target range within the next six to 12 months. Importantly, we believe that our strong capital and liquidity position supports continued capital return to shareholders. Although the year to date results are below our plan, we continue to be pleased with the progress we have made de-risking the company since our separation from MetLife. Since year end 2017, Our spread-based business has grown by over 225% on an account value basis, primarily driven by continued growth in our Shield business. And our variable annuity account value has decreased by approximately 27% over that same period. Along the way, we also substantially de-risked the company by lowering our equity risk tolerance before the pandemic, and moving from a tactical to strategic position on interest rate risk in 2022 when long-term interest rates were roughly 350 to 4%. Now, let me turn to our continued progress on executing our focus strategy. In the second quarter, corporate expenses were $200 million, bringing year-to-date corporate expenses through June 30th to $407 million. which is approximately 6% lower compared with the same period in 2023. While we expect expenses to increase in the second half of 2024, we still anticipate full-year 2024 corporate expenses to be lower than full-year 2023 corporate expenses. We remain committed to discipline expense management and continue to evaluate potential areas of improvement to manage expenses and generate additional savings over the next several years. Moving to distribution and sales. I'm proud of the success of our distribution franchise. I've said that before. The second quarter sales results further demonstrate our complimentary and diversified suite of annuity and life insurance products. Year to date through June 30th, total annuity sales were $5.3 billion. consistent with the same period in 2023. We remain a leader in the registered index-linked annuity market with record sales of our SHIELD annuities, which exceeded $2 billion in the quarter. Year-to-date SHIELD sales exceeded $3.9 billion, a record level for the first half of the year, and an increase of 23% over the same period in 2023. Also contributing to total annuity sales in the first half of 2024 were $351 million in fixed indexed annuity or FIA sales, a 60% increase over 2023, driven by our Secure Key product, which was launched last November. The growth in SHIELD and FIA was offset by lower fixed deferred annuity sales. As we mentioned on our first quarter earnings call, we expected second quarter fixed deferred annuity sales to be lower as we transitioned to a new reinsurer for this product. That went into effect in June of this year. Life insurance sales in the second quarter were $28 million, which contributed to record year-to-date life insurance sales of $57 million, an increase of approximately 19% compared with the same period of 2023. I am pleased with the continued steady growth in both our annuity and life insurance sales, and we continue to focus on refreshing our products over time. Last month, as an example, we launched our newest iteration of our Shield product, along with new enhancements to our SmartCare product suite. I am also extremely excited about BlackRock's Life Path Paycheck that launched at the end of April. In the quarter, we received our first deposits of over $340 million through this innovative solution. We expect inflows associated with Life Path Paycheck to be uneven on a quarter-to-quarter basis as defined contribution plans implement the solution. So we do not expect much activity in the third quarter, but we expect more activity in the fourth quarter. We are thrilled with the launch and Lifepath Paycheck's success to date. In addition, year to date through August 2nd, we repurchased $151 million of our common stock with $64 million repurchased in the second quarter and an additional $25 million of common stock repurchased through August 2nd. We continue to believe that our strong capital and liquidity position supports our commitment to returning capital to shareholders through common stock repurchases. In closing, while we had many successes in the quarter, we have a number of specific initiatives underway designed to improve capital efficiency, unlock capital, and return the RBC ratio to our target range within the next six to 12 months. We have successfully managed through many challenges over the last several years related to macroeconomic volatility, regulatory changes, and of course, a global pandemic. With our disciplined and focused execution, we have accomplished a significant amount over the last several years, and we expect to continue that progress in the future. We have a strategy in place that we are focused on executing, and I look forward to updating you on our progress later this year. I will now turn the call over to Ed to discuss our second quarter financial results in some more detail.