After Brighthouse Financial released earnings for the first quarter, Wall Street securities analysts used a subtle approach when asking company executives about the possibility that the company might soon go through a merger or acquisition.
Today, during a conference call Brighthouse organized to go over earnings for the second quarter, the analysts repeatedly pressed Brighthouse executives to talk about mergers and acquisition possibilities.
Nicholas Annitto of Wells Fargo, Peter Troisi of Barclays and Jimmy Bhullar of JPMorgan all asked Eric Steigerwalt, the company's CEO, and Ed Spehar, the chief financial officer, about M&A-related issues.
Annitto asked whether the company's auditors would make Brighthouse "consider any of the findings from all the independent actuarial reviews that have been done as a part of the rumored sales process."
Troisi asked whether the Brighthouse approach to paying dividends on preferred stock would change if "the company was part of an M&A process."
Bhullar asked about how Brighthouse executives see the company's path forward.
"I'm not sure what you want to say on the whole discussion of M&A, but, maybe, just to comment on your confidence in the company's ability to survive and thrive on a stand-alone basis?" Bhullar asked. "Do you feel you have the capital flexibility, the product breadth?"
Steigerwalt and Spehar repeatedly said that the company does not comment on rumors but is doing well.
Brighthouse held the call to go over earnings for the second quarter, which ended June 30. The company streamed the call live and posted a recording on its website.
What it means: Wall Street analysts seem to think someone is going to acquire Brighthouse.
Brighthouse: Brighthouse is a Charlotte, North Carolina-based company that holds the old individual life and annuity operations of MetLife.
MetLife separated from Brighthouse in response to the 2007-2009 financial crisis and federal policymakers' concerns about the idea of financial services companies becoming "too big too fail."
Deal rumors: Rumors about the possibility that Brighthouse could be up for sale have been circulating for months.
One frontrunner could be Aquarian, according to press reports.
No one has listed Jackson Financial as a possible buyer, but analysts have noted that the company seems to have a surprisingly large amount of cash on hand.
The earnings: Brighthouse is reporting $85 million in net income for the second quarter on $871 million in revenue, compared with $9 million in net income on $1.4 billion in revenue for the second quarter of 2024.
Adjusted earnings, less notable items, fell to $198 million, from $346 million.
Sales of the Shield Level annuities the company wants to sell fell to $1.9 billion, from $2 billion, but sales of fixed annuities, including fixed indexed annuities, increased to $505 million, from $225 million, and overall annuity sales were up 8%.
Capital: Steigerwalt said Brighthouse has plenty of capital to support new product sales.
"We're actually having the beginning of a very nice third quarter," he said.
Brighthouse has a combined risk-based capital ratio, or financial strength summary indicator, between 405% and 425% of regulators' required level in the second quarter, according to Spehar.
That was within the company's targeted RBC ratio range of 400% to 450% in normal market conditions, Spehar said.
The company is working to expand capital and flexibility further by making deals with reinsurers and changing the way it hedges its annuities, executives said.
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