Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Portfolio Construction

Brighthouse Seeks `Sleep-at-Night' Calm in $79 Billion Portfolio

Your article was successfully shared with the contacts you provided.

Brighthouse Financial Inc., the annuity provider being spun off from MetLife Inc., is focusing on hedging risks in its $79 billion investment portfolio so that the company doesn’t have to worry about making abrupt shifts in its holdings, the chief executive officer said.

“It’s a sleep-at-night investment portfolio, so that when we make these guarantees, we know that we’re going to be there when customers need us to pay off on our promises,” Eric Steigerwalt said Friday in a phone interview. “We put products on the book that inherently have market sensitivity, and we hedge that market sensitivity to make sure that the company is protected always.”

(Related: SEC Clears MetLife to Complete Brighthouse Spinoff)

Steigerwalt was preparing for the independence of Brighthouse, an insurer with about $220 billion of assets that started regular trading on the Nasdaq Stock Market this morning. The business will focus on selling life insurance and annuities, retirement products where companies’ results can fluctuate based on financial markets. While some newer companies in the annuity market, such as Athene Holding Ltd., have highlighted the complexity risk they seek to generate higher investment returns, Steigerwalt said he’s focused on the safety of the portfolio as he seeks to attract financial advisers and new customers.

That involves moves to limit the risk that a stock plunge or credit crisis will widen liabilities. Rivals including Hartford Financial Services Group Inc. were burned by such losses in 2008 and 2009.

External Managers

Steigerwalt has tapped John Rosenthal, a longtime money manager at MetLife, to run Brighthouse’s portfolio, which is predominantly in bonds. MetLife will help oversee the investments for a while after the separation, although Brighthouse said it could later use a group of external asset managers to help.

“We have a well diversified, high quality investment portfolio and that’s not going to change,” Steigerwalt said. “We will run the portfolio in a very similar fashion to how it was run previously as a division of MetLife.”

MetLife shareholders are set to receive one share of Brighthouse stock for every 11 shares of the parent company after the close of trading Friday. The spinoff will allow investors to decide whether they want to own a stand-alone annuity and life provider, or MetLife, which will be less market-sensitive after the separation, MetLife Chief Financial Officer John Hele said in May.

The separation opens a new chapter for the companies. MetLife has been seeking to reduce costs, a plan that included job cuts, in order to increase efficiency. The insurer plans to focus more on selling coverage through employers, as well as its international markets.

Steigerwalt said that the growth in Brighthouse’s index-linked annuity product, Shield Level Selector, has been strong and he’s seeking to add more staff.

“I think we’ve got some wind in our sails here going forward with respect to these types of solutions for consumers,” Steigerwalt said. And “we’re in hiring mode. The spinoff is just inherently exciting.”

— Read Prudential to Realign Its U.S. Businesses on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.