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Brighthouse Leaps Into the Annuity Future

By Jane Wollman Rusoff

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Brighthouse Financial, the new independent company created from MetLife’s retail annuities and life insurance operations, has spun off as a Nasdaq-traded firm focused exclusively on those two product lines. That’s where Brighthouse is right now. As for where it plans to go, ThinkAdvisor recently interviewed BHF president-CEO Eric Steigerwalt to find out.

“Simple” and “transparent” are the company’s bywords in developing products, which are sold by about 400 independent brokers, BDs and banks.

In the interview, Steigerwalt revealed that BHF is giving its life insurance portfolio a makeover and that Massachusetts Mutual Life Insurance Co.(MassMutual) is “a strong Brighthouse Financial partner,” with which it is issuing a fixed indexed annuity solely through the MassMutual Career Agency force. In July 2016, MetLife sold its Premium Client Group — U.S. retail advisor force — to MassMutual.

BHF has 2.7 million annuity contracts and life insurance policies in force. Year-to-date sales of its flagship Shield annuities totaled more than $1 billion.

BHF’s top-selling annuity products are single-premium deferred indexed annuities, which track a chosen market index or multiple indexes. This year, the firm’s Shield Level Selector was named one of Barron’s top 50 annuities for tax-deferred investing.

When, in January 2016, MetLife announced its intention to spin off most of its retail annuity and life insurance business — in an environment of historically low interest rates — one reason cited was to decrease its size so as to limit federal capital requirements.

“We have concluded that an independent new company would be able to compete more effectively and generate stronger returns for shareholders,” MetLife chair-president-CEO Steven Kandarian said in a statement at that time.

BHF completed its separation from MetLife on Aug. 4, 2017, and went public three days after that, celebrating its first day of trading by ringing the Nasdaq opening and closing bells.

Headquartered in Charlotte, North Carolina, BHF’s employees number about 1,200 nationwide. In the interview, Steigerwalt indicated plans to hire a few hundred more employees “in the near future.” (According to a recent online job posting, it is, for instance, seeking a senior sales compensation payment specialist to, in part, provide “timely processing” of BHF “commission payments … to field agents and broker-dealers.”)

Meanwhile, BHF reportedly plans to cut costs by about $150 million starting in 2020.

Steigerwalt, 55, was named president and CEO in March of this year. He was executive vice president of MetLife’s retail business before the spinoff, which had moved from New York to Charlotte in 2012.  He joined MetLife in 1998 to manage operations of the insurer’s demutualization — converting to a shareholder-owned company — and initial public offering. Earlier, he was with the Equitable Cos. for five years and was a derivatives trader at the Fossett Corp.

ThinkAdvisor recently interviewed Steigerwalt by email to see what lies ahead for the new Brighthouse Financial. Here are highlights:

THINKADVISOR: What’s BHF’s biggest challenge?

ERIC STEIGERWALT: We’re up to the challenge of helping people achieve financial security by being laser-focused on developing simpler and more transparent annuity and life insurance solutions that are valuable to both our advisors and their clients. 

How big is consumer need for those product lines?

Almost 40% of baby boomers have nothing saved for retirement, and nearly 30% of U.S. households have no life insurance coverage. We see a lot of opportunity to help people.

What sort of innovations can be expected from BHF?

We’re aiming to develop and issue simpler, more transparent solutions. For example, we recently launched our Shield Level Select Access annuity designed to meet the needs of fee-based advisors who would like to offer annuities as part of their practice.

Versus products of competing companies, what advantages do your annuities and life insurance offer advisors?

The greatest advantage to advisors and our other stakeholders is that we’re a company built to focus solely on [those two lines of business]. Our mission is to help more Americans secure their financial future.

What strategies will you be initiating this fall?

We’re focused on executing our strategy as an independent company now and into the foreseeable future. We’re also revamping our life insurance portfolio, working closely with our distribution partners and moving off our transition service agreements with MetLife.

What is BHF’s position on the Labor Department’s fiduciary standard rule?

We support regulations that are in the best interest of consumers. We’re pleased that the Department has requested a delay in applicability of the revised exemptions. We hope this means they will be taking the time to provide additional, and much-needed, guidance to the industry.

What are your top-selling products?

Single-premium deferred index annuities. They’re meeting a need for clients looking for both protection from market volatility and an opportunity for growth — all with no annual fees.

How does BHF help advisors sell variable annuities, which are controversial in the marketplace and about which the consumer press consistently says: Beware?

These products can be a valuable component of a financial plan. We’ve created several online tools to help advisors and potential customers better understand how our products work and fit into a comprehensive retirement plan.

From your perspective, why did MetLife spin off its retail operations?

We believe that this business is able to compete more effectively as an independent company, as we said when we announced the separation in 2016. The key to our success is our ability to exclusively focus on helping people have financial security through annuity and life insurance solutions.

Is BHF in hiring mode?

We plan to hire 200-300 employees across our offices in the near future.

MetLife reportedly kept a 20% stake in BHF. Is that right?

MetLife is currently Brighthouse Financial’s largest shareholder. It retains about 19.9% of BHF’s common stock.

What will you do to boost BHF earnings and profitability?

A key element of our strategy over time is to leverage our infrastructure to be a lean, flexible, cost-competitive operation without sacrificing service levels for both our policyholders and contract holders.

What has MetLife’s sale of its Premier Client Group — U.S. retail distribution operation — to MassMutual meant to BHF? Are you now developing annuities for them?

MassMutual is a strong Brighthouse Financial partner. We recently partnered with the company to issue a fixed indexed annuity exclusively through the MassMutual Career Agency force [Premier Client Group].

To what extent is BHF distributing annuities through Wells Fargo Advisors?

They’re serving as the initial distributor for one of our annuity products — Shield Level 10. We have relationships with approximately 400 independent distribution partners who sell our annuity and life insurance solutions. They include independent brokers, broker-dealers and banks.

What’s your strategy for attracting advisors to sell BHF products?

Throughout the process of becoming an independent company, we’ve had an open line of communication with our advisory base and distribution partners to best understand their needs and make sure our product suite reflects those needs. We also ensured that our marketing and advertising campaign would tell a clear story of who we are so that advisors — and their clients — would understand our history.

Why have Shield products been successful?

Advisors have turned to them because they offer protection against losses while allowing for greater portfolio diversification and market participation.

How can Shield Level annuities customize clients’ retirement strategy?

They offer the right level of choice in a simpler, more transparent way than other annuities. They allow a client to choose specific features that make sense for their unique goals. They can choose the level or levels of protection that fit their needs from a variety of indices offering market exposure. And they can choose from different term lengths based on their time horizons and needs.

What’s BHF’s chief competitive strength?

The key to our success is our ability to exclusively focus on annuities and life insurance products. As an independent company, we can provide a streamlined set of solutions that will be simple and transparent.

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