AM Best Affirms Credit Ratings of Brighthouse Financial Inc. and Its Subsidiaries

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” for Brighthouse Life Insurance Company and its affiliates. Concurrently, the Long-Term ICR of “bbb+” for Brighthouse Financial, Inc. was also affirmed, with all ratings carrying a stable outlook. These ratings reflect Brighthouse's strong balance sheet, operating performance, and effective risk management. The company reported a net operating loss in 2020 but has seen a strong earnings recovery in Q3 2021, driven by its flagship annuity product.

Positive

• Financial Strength Rating of A (Excellent) affirmed by AM Best.
• Long-Term ICR of 'bbb+' indicates good credit quality.
• Strong operating performance demonstrated in Q3 2021.
• Brighthouse Shield Level Annuity has significantly increased sales.
• Strategic alliance with BlackRock aids in consumer access to lifetime income.
• Well-developed enterprise risk management program.

Negative

• Net operating loss reported in 2020 due to unfavorable market conditions.
• Legacy life and annuity businesses are being run off, impacting growth.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of Brighthouse Life Insurance Company (headquartered in Charlotte, NC), New England Life Insurance Company (Boston, MA) and Brighthouse Life Insurance Company of NY (New York, NY). These entities collectively are referred to as Brighthouse and are operating insurance subsidiaries of Brighthouse Financial, Inc. (Brighthouse Financial) (headquartered in Charlotte, NC) [NASDAQ: BHF]. The outlook of these Credit Ratings (rating) is stable.

Concurrently, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and the Long-Term Issue Credit Ratings (Long-Term IR) of Brighthouse Financial, Inc. Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and the Long-Term IR of Brighthouse Holdings, LLC, Brighthouse Financial’s intermediate holding company. The outlook of these ratings is stable. (See below for a detailed listing of the Long-Term IRs.)

The ratings reflect Brighthouse’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

Brighthouse maintains a very strong level of risk-adjusted capital, as measured by Best’s Capital Adequacy Ratio (BCAR), in line with prior years. Capital and surplus has fluctuated on a statutory and GAAP basis over the most recent five-year period, partially driven by variable annuity reform. Mitigating the fluctuation of capital are Brighthouse’s good financial flexibility, good liquidity and access to available cash at the holding company.

As of year-end 2020, Brighthouse reported a net operating loss, which was attributable to unfavorable market conditions. Despite a prior-year loss, the company has reported a strong earnings recovery as of third-quarter 2021. The company’s flagship annuity product – Brighthouse Shield Level Annuity – has grown significantly over recent years and accounts for a majority of the company’s annuity sales, allowing Brighthouse to remain a major participant in the registered index-linked annuities marketplace. Partially offsetting the growth of the annuity business is Brighthouse’s run-off of legacy life and annuity businesses. Additionally, on the life insurance side, Brighthouse has entered into the hybrid indexed universal life space with Brighthouse SmartCare.

Brighthouse’s favorable business profile is indicative of the continued improvement of the company’s brand, product and geographic diversification, as well as its strategic alliance with BlackRock. Collaborating with BlackRock provides Brighthouse with the capability to provide its consumers with simplified access to lifetime income. The company remains highly sensitive to the macroeconomic environment.

Brighthouse’s ERM program is well-developed and appropriate for its risk profile.

The following Long-Term IRs have been affirmed with stable outlooks:

Brighthouse Financial, Inc.—
-- “bbb+” (Good) on $1.5 billion 3.7% senior unsecured notes, due 2027
-- “bbb+” (Good) on $615 million 5.625% senior unsecured notes, due 2030
-- “bbb+” (Good) on $1.5 billion 4.7% senior unsecured notes, due 2047
-- “bbb+” (Good) on $400 million 3.85% senior unsecured notes, due 2051
-- “bbb-” (Good) on $350 million 4.625% non-cumulative preferred stock
-- “bbb-” (Good) on $375 million 6.25% junior subordinated debentures, due 2058
-- “bbb-” (Good) on $425 million 6.6% non-cumulative preferred stock, Series A
-- “bbb-” (Good) on $402.5 million 6.75% non-cumulative preferred stock, Series B
-- “bbb-” (Good) on $575 million 5.375% non-cumulative preferred stock, Series C

Brighthouse Holdings, LLC—
-- “bbb-” (Good) on $50 million fixed rate cumulative preferred units, Series A

The following Long-Term IR has been affirmed with a stable outlook:

Brighthouse Financial Institutional Funding I, LLC—“a+” (Excellent) program rating
-- “a+” (Excellent) on outstanding notes issued under the program rating

The following indicative Long-Term IRs have been affirmed with stable outlooks:

Brighthouse Financial, Inc.-
-- “bbb+” (Good) on senior unsecured debt
-- “bbb” (Good) on subordinated debt
-- “bbb-” (Good) on preferred stock
-- “bbb-” (Good) on junior subordinated debt

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211217005631/en/

Shauna Nelson

Senior Financial Analyst

+1 908 439 2200, ext. 5365

shauna.nelson@ambest.com

Bruno Caron

Associate Director

+1 908 439 2200, ext. 5144

bruno.caron@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What is the latest rating of Brighthouse Financial (BHF) by AM Best?

AM Best affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of 'bbb+' (Good) for Brighthouse Financial (BHF).

What factors contributed to the positive ratings assigned to BHF?

The ratings reflect Brighthouse's strong balance sheet strength, operating performance, and effective risk management.

How did Brighthouse Financial perform in Q3 2021?

Brighthouse Financial reported a strong earnings recovery in Q3 2021, attributed to the growth of its flagship annuity product.

What strategic partnerships does Brighthouse Financial have?

Brighthouse Financial has a strategic alliance with BlackRock, enhancing consumer access to lifetime income.

What challenges did Brighthouse Financial face in 2020?

Brighthouse reported a net operating loss in 2020 due to unfavorable market conditions.