Brighthouse Financial, Inc.

Good morning, ladies and gentlemen, and welcome to Bright House Financial's third quarter 2024 earnings conference call. My name is Michelle, 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, 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, please proceed.

Thank you, and good morning. Welcome to Bright House Financial's third 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 Sehar, 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 would 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, November 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. I'll now turn the call over to our CEO, Eric Stagerwald.

Thank you, Dana, and good morning, everyone. Today, I will provide an update on the strategic initiatives that we discussed on our second quarter earnings call, followed by some highlights from the third quarter. Following my remarks, Ed will provide more detail on our financial results in the quarter. I am pleased to share that in the third quarter, we continued to make progress on our strategic initiatives designed to improve capital efficiency, unlock capital, and return our combined risk-based capital, or RBC, ratio to our target range of 400% to 450% in normal market conditions. As I said on our second quarter conference call, we are comfortable operating below our targeted RBC range for temporary periods. The reason for that is twofold. One, we have a number of strategic initiatives underway that we are confident will improve our RBC ratio. And two, We had $1.3 billion of liquid assets at the holding company as of the end of the third quarter. Our strategic initiatives include reinsurance opportunities, along with actions to help simplify our hedging strategy. We are working on multiple reinsurance opportunities, both in-force and flow reinsurance. We have been working on one particular agreement with a third party to reinsure a legacy block of fixed and payout annuities. We are in the final stages and expect to enter into this reinsurance agreement before year end. Pro forma for this reinsurance agreement, our September 30th estimated combined RBC ratio would be at the lower end of our targeted range in normal markets. In addition, we have made substantial progress on simplifying our hedging strategy. As we have discussed previously, the significant growth we have seen in our SHIELD annuity block over the past several years has resulted in a balanced risk profile for our annuity business, but has also increased the complexity of managing our variable annuity or VA and SHIELD business on a combined basis. To address this issue, we started to hedge SHIELD sales on a standalone basis with the launch of our new SHIELD product in July, which we discussed on our second quarter earnings call. We are expanding that approach in the fourth quarter to include our SHIELD level pay plus product that was launched in August of 2022 and any remaining sales associated with our Shield product suite. Additionally, we are formulating a revised hedging strategy for our enforce book, which will now essentially be a closed block of business. Despite the refinements to our hedging program, our overall focus remains the same, which is to protect our statutory balance sheet under adverse market scenarios. At the end of the third quarter, we estimate that our combined RBC ratio was between 365 and 385 percent, and Ed will discuss that in more detail in a moment. As I mentioned earlier, we expect our combined RBC ratio would be at the low end of our target range in normal markets, assuming the entry into the reinsurance agreement on our fixed and payout annuity enforced business. Also, at the end of the quarter, our holding company liquid assets remained very robust and were approximately $1.3 billion. We have consistently stated That is appropriate for a life insurer to have a conservative cash and liquidity position at the holding company, and our recent experience illustrates why this is a prudent strategy. Our substantial cash at the holding company also supports our common stock repurchase program. In the third quarter, we repurchased $64 million of our common stock. with an additional approximately $25 million repurchased through November 1st. From the beginning of our share repurchase program, which started in August of 2018, through November 1st of this year, we have repurchased over $2.4 billion of our common stock, reducing our shares outstanding by over 50% over that time, and since we became an independent public company in 2017. Along with our commitment to prudent financial management, our overall priorities at Bright House Financial have been consistent over the years and are focused on executing our growth strategy, which is centered around our complementary and competitive market offerings, as well as our expansive third-party distribution footprint, and efficiently managing our expenses as we recognize that being a low-cost producer is very important in our industry. We have continued to execute on this focus strategy, which is demonstrated both by our strong sales results through the third quarter of this year and the year-to-date reduction in our corporate expenses. On a year-to-date basis through September 30th, our total annuity sales were $7.8 billion, consistent with the same period in 2023. Sales of our flagship Shield annuity products have remained very strong at $5.8 billion year-to-date, a 15% increase over 2023, and a record level for Bright House. We intend to remain a leader in the registered index-linked annuity or RILA market with continued growth in our Shield sales. Additionally, we remain pleased with our fixed annuity sales as we continue to see year-over-year growth in our fixed indexed annuities driven by our Secure Key product. While sales of fixed deferred annuities were down on a year-to-date basis, They picked back up in the third quarter as expected as we transitioned to a new reinsurer in June. We've continued to grow in the life insurance space with life insurance sales of $87 million year to date through September 30th, an increase of 19% compared with the same period last year. I'm pleased with the strong sales results that we continue to deliver. and expect further growth in both annuities and life insurance sales as we remain focused on providing a comprehensive and complementary suite of products. I would also like to touch on our expansion into the institutional space with the launch of BlackRock's Lifepath Paycheck product earlier this year. As we discussed on our second quarter earnings call, when we received our first deposits, We did not expect to see much activity in the third quarter, as the inflows associated with LifePath Paycheck will be uneven on a quarter-to-quarter basis, as defined contribution plans implement the solution. While we expect limited activity through the end of this year, we do expect to see additional inflows in 2025, and we remain very excited about this product and its success to date. Along with the continued success in our growth strategy, we remain disciplined with our expense management. Corporate expenses were $203 million in the third quarter and $610 million on a year-to-date basis, a 5 percent decrease year over year. As I have said previously, we expect an increase in the fourth quarter expenses as a result of typical seasonality. We still anticipate full year 2024 corporate expenses to come in lower than full year 2023. In closing, I am pleased with all the progress we have made on our strategic initiatives, which are designed to create more capital efficiency, unlock capital, and return our combined RBC ratio to within our target range under normal market conditions. While our work continues, we remain focused on continuing to execute on our strategy, and I look forward to keeping you updated on our progress. With that, I will turn the call over to Ed to discuss our financial results in more detail.