Brighthouse Financial, Inc. (NASDAQ:BHF) Q1 2023 Earnings Call Transcript

Edward Spehar : Sure. So when we’re looking at the RBC ratio, we’ve talked in the past about a normal capital usage to fund growth of about 5 RBC points a quarter. So what — the dynamic’s a little bit different this year because of the substantial amount of fixed annuity sales that we had last year. And I think, Ryan, as you know, there is a calendar year capital charge for business risk that rolls off at the beginning of every year. That is not a material consideration when you think about the Shield product, it is when you think about fixed annuities? And so because of the fact that, that capital charge rolls off at the beginning of every year, you are seeing in this first quarter, capital related to growth actually being a contributor to the RBC ratio. So I would say, as you look forward, everything else being equal, assuming we continue to grow, that you will see capital usage over the next few quarters, which will put some downward pressure on the RBC ratio.

Ryan Krueger : And would you expect to be above that 5-point impact near term, just given — I know fixed annuity sales came down some, but they’re still a fair amount higher than they had been running previously.

Edward Spehar : I would. And I would just simply now, again, it’s going to be dependent on sales mix, right? And so remember, fixed annuities last year were more than $3.5 billion. In the year prior to that, they were $100 million. So we have been opportunistic in that market, depending on the environment and the margin that we can get. So it certainly is going to be heavily dependent on business mix. But I would just say that if you assume it’s a normal quarter is 5 points of usage. And I told you that the first quarter was actually a contributor, right? For it to average 5 points of usage over a full year, you’re going to have to have something more than 5 points per quarter. Again, everything else being equal, sales mix, et cetera.

Operator: Thank you, ladies and gentlemen, I will now turn the call back over to Dana Amante for any closing remarks.

Dana Amante : Thank you, Olivia, and thank you all for joining us today and for your interest in Brighthouse Financial. Have a great day.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.