Prepared remarks
Good morning, ladies and gentlemen, and welcome to Brighthouse Financial’s First Quarter 2025 Earnings Conference Call. My name is Michelle, and I will be your coordinator today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference call. As a reminder, the conference is being recorded for replay purposes. I would now like to turn the presentation over to Dana Amante, Head of Investor Relations. Ms. Amante, you may proceed.
Thank you, and good morning. Welcome to Brighthouse Financial's first quarter 2025 earnings call. Material for today's call were released last night and can be found on the Investor Relations section of our website. We encourage you to review all of these materials. Today, you will hear from Eric Steigerwalt, our President and Chief Executive Officer; and Ed Spehar, our Chief Financial Officer. Following our prepared remarks, we will open the call up for a question-and-answer period. Also here with us today to participate in the discussions are Myles Lambert, our Chief Distribution and Marketing Officer; David Rosenbaum, Head of Product and Underwriting, and John Rosenthal, our Chief Investment Officer. Before we begin, I'd like to note that our discussion during this call may include forward-looking statements within the meaning of the Federal Securities Laws. Brighthouse Financial's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties described from time to time in Brighthouse Financial’s filings with the SEC. Information discussed on today's call speaks only as of today, May 9, 2025. The company undertakes no obligation to update any information discussed on today's call. During this call, we will be discussing certain financial measures that are not based on generally accepted accounting principles, also known as non-GAAP measures. Reconciliation of these non-GAAP measures on a historical basis to the most directly comparable GAAP measures and related definitions may be found on our earnings release, slide presentation, and financial supplement. And finally, references to statutory results, including certain statutory-based measures used by management, are preliminary due to the timing of the filing of the statutory statement. And now, I'll turn the call over to our CEO, Eric Steigerwalt.
Thank you, Dana, and good morning, everyone. Brighthouse Financial reported solid results in the first quarter of 2025. During the quarter, we made further progress against our focused business strategy, including delivering strong sales results in both annuities and life insurance. We also made additional progress against the capital-focused strategic initiatives that we announced last year and that we continue to execute. We ended the quarter with holding company liquid assets of approximately $1 billion, maintaining a robust cash position. We also ended the quarter with an estimated combined risk-based capital or RBC ratio between 420% and 440%, which is within our target RBC ratio range of 400% to 450% in normal markets. As we have said in the past, balance sheet strength is essential to support our distribution franchise. I am pleased with the progress that we have made against our capital-focused strategic initiatives, which includes our ongoing work to simplify our Variable Annuity, or VA, and Shield hedging strategy. As we discussed on our fourth quarter earnings call, as of year-end 2024, we have fully transitioned to hedging Shield annuity new business on a standalone basis, an important milestone in simplifying our hedging strategy. In 2025, we have continued to revise our hedging strategy for both our in-force VA and our first-generation Shield book of business. While the execution of our capital-focused strategic initiatives continues, it is important to note that our focus on protecting our statutory balance sheet under adverse market scenarios remains unchanged. Shifting to sales. As I mentioned earlier, we delivered strong sales results in the quarter. I am especially pleased with the continued sales growth of our flagship Shield annuity product suite, which I will discuss in more detail in a moment. Also in the quarter, we continued to drive steady growth in sales of our life insurance products. Our total annuity sales in the quarter were strong at approximately $2.3 billion. This includes approximately $2 billion in total Shield sales, which increased 3% sequentially and 5% compared with the first quarter of 2024. As we have said previously, last year we launched updates to our Shield Suite that are designed to help these products remain competitive and adapt to changes in the industry. And we remain proud to be a leader in the registered index linked annuity marketplace. While our total annuity sales were strong in the quarter, they were down 21% compared with the first quarter of 2024, primarily driven by lower sales of fixed annuities. Sequentially, annuity sales increased 1%. We're pleased to be one of the top annuity providers in the United States, and we continue to leverage the depth and breadth of our expertise, along with our strong distribution relationships, to competitively position ourselves in the markets that we choose to compete in. As I mentioned earlier, we continue to drive steady growth in sales of our life insurance product suite in the quarter. Life sales totaled $36 million, which is a 24% increase compared with the first quarter of 2024 and a 9% increase sequentially. As we have discussed previously, we have expanded into the institutional space with BlackRock's LifePath paycheck or LPP product, becoming available in defined contribution plans last year. Earlier this year, BlackRock announced that LPP is now live in six employer retirement plans, totaling $16 billion in assets under management. While inflows associated with LPP are expected to be uneven on a quarter to quarter basis, as defined contribution plans implement the solution, we do expect to see additional flows in 2025. We remain very excited about LPP and its success to date, and we expect our involvement with this product to enable Brighthouse to reach new customers through the worksite channel. Turning to expenses. Corporate expenses in the quarter were $239 million on a pre-tax basis, which was higher than our run rate expectation. It is important to note that this higher level of corporate expenses is non-trendable, and we expect corporate expenses to normalize the remainder of 2025. Additionally, we remain focused on maintaining a disciplined approach to expense management, which is an important aspect of our business strategy. Regarding capital return to shareholders, in the quarter we continued to return capital through the repurchase of our common stock. We repurchased $59 million of our common stock in the quarter with an additional $26 million repurchased through May 6th. Before wrapping up, I would like to briefly touch on the current macro environment. Brighthouse Financial has a proven track record of being able to navigate volatile markets and periods of uncertainty, and we believe that we are well positioned to navigate this current environment. We remain focused on our mission and strategy and on delivering for our partners, customers and shareholders. To wrap up, we delivered a solid quarter to start the year and I'm pleased with our progress as we continue to execute our business strategy. We continue to generate strong sales in both annuities and life insurance, as well as support our distribution franchise through our strong balance sheet and robust liquidity position. In addition, we continue to make progress against our strategic initiatives designed to improve capital efficiency, unlock capital, and remain within our target combined RBC ratio range in normal markets. I'll now turn the call over to Ed to discuss our first quarter financial results.
Thank you, Eric. And good morning, everyone. After the market closed yesterday, Brighthouse Financial reported results for the first quarter of 2025, including preliminary statutory results. Statutory combined total adjusted capital or TAC was approximately $5.5 billion at March 31st compared with approximately $5.4 billion at December 31st. The estimated combined risk-based capital or RBC ratio was between 420% and 440% within our target range of 400% to 450% in normal market conditions. And normalized statutory earnings for the quarter were approximately $300 million. Statutory results benefited from a 25 basis point increase in the prescribed 20-year treasury yield mean reversion point, which increased from 3.75% to 4%. Additionally, as Eric mentioned earlier, we continue to make progress on our capital-focused strategic initiatives. As we discussed on the fourth quarter earnings call, as of year-end 2024, we fully transitioned to hedging new business for our Shield product suite on a standalone basis. We continue to develop a separate hedging strategy for our variable annuity and first-generation Shield annuity block of business. We expect to complete the transition to this revised strategy for this legacy block of business before year-end. Importantly, we continue to focus on protecting our statutory balance sheet under adverse market scenarios. Holding company liquid assets are still substantial, with approximately $1 billion at March 31. We think about our capital strength as a combination of the operating company's RBC ratio, holding company liquid assets, and a conservative capital structure. Now turning to first quarter adjusted earnings results. Adjusted earnings for the quarter were $235 million, including an unfavorable notable item of $10 million or $0.17 per share, related to an actuarial model refinement. Adjusted earnings excluding the impact from the notable item were $245 million, which compares with adjusted earnings on the same basis of $352 million in the fourth quarter of 2024 and $268 million in the first quarter of 2024. Adjusted earnings results excluding the impact of the notable item were approximately $15 million or $0.26 per share below our average quarterly run rate expectation. Alternative investment income was $39 million, or approximately $0.66, below our quarterly average run rate expectation. The alternative investment portfolio yield in the quarter was 1.4%. As a reminder, we continue to expect a yield on this portfolio of 9% to 11% annually over the long term. Our underwriting margin was above our run rate expectation, which more than offset the impact from corporate expenses that were high relative to our quarterly run rate expectation. While the underwriting margin was higher versus our run rate expectation, it was lower sequentially driven by normal fluctuations in the volume and severity of claims, net of reinsurance. Shifting to results by segment. The annuity segment reported adjusted earnings less notable items of $324 million, which was relatively flat sequentially. The life segment reported adjusted earnings of $9 million. Sequentially, results reflected a lower underwriting margin, lower net investment income, and higher expenses. The runoff segment had an adjusted loss of $64 million. Results reflected lower net investment income, partially offset by a higher underwriting margin sequentially. The corporate and other segment reported an adjusted loss of $24 million, which reflected higher expenses sequentially. In closing, we are pleased with our first quarter results, particularly because statutory results were in line with our expectations. The estimated combined RBC ratio ended the quarter within our target range and we maintained a robust level of holding company liquid assets. We will now turn the call over to the operator to begin the question-and-answer session.
Questions and answers
Thank you. Our first question is going to come from the line of Wes Carmichael with Autonomous Research. Your line is open. Please go ahead.
Hey, good morning, everybody. One clarification, Ed, the 25 basis points increase in mean reversion point, did you quantify how much of a benefit that was to normalized stat earnings?
Sure. Good morning, Wes. It was around $200 million.
Okay. Thank you. I guess my second question on sales and fixed annuities, it's been a little bit softer the last couple of quarters. And I know you had some change in reinsurance partner, but would you expect that to accelerate from here or is the competitive environment just not very attractive?
Hey Wes, this is David. I'll start with that. So sales move around a bit and you've seen that in our results for fixed annuities. The first quarter of last year, 2024, was a big sales volume for us. And in the third quarter, as you mentioned, was also a solid quarter after we reestablished ourselves in the fixed market, after we brought on a new reinsurance partner. So, when we think about this market, there's a lot of competition, as you mentioned. It is very rate dependent, and we're going to continue to monitor sales volumes and the competitive environment in conjunction with our reinsurance partners. And our goal here is to really have consistent competitive rates, while maintaining our pricing discipline. So we are looking to build momentum to drive fixed sales over the remainder of the year.
Thank you.
Thank you. And one moment for our next question. Our next question comes from the line of John Barnidge with Piper Sandler. Your line is open. Please go ahead.
Thank you very much for the opportunity. My question is on your outlook for flows and surrender activity this year. How are you thinking about that trending given a dynamic macro environment?
Thank you, John. I'll begin by highlighting the trends we've observed over the past several quarters, which continued into the first quarter of this year as anticipated. Outflows were slightly lower than in the fourth quarter but higher than the first quarter of last year, primarily driven by variable annuity and Shield outflows, particularly full surrenders. Looking ahead to 2025, we anticipate a significant amount of fixed rate annuities, especially the three and five-year products, to come out of surrender in the latter half of that year. We are also seeing an increasing amount of Shield products maturing each month, thanks to growing sales over recent years. Additionally, while not related to surrender charges, we are still experiencing outflows from our variable annuity block. Taking all these factors into account, I expect flows to be at or above 2024 levels this year.
Thank you for that. And my follow-up question, how do you think about the opportunity to better optimize your investment portfolio to be more competitive in the RILA market? Thank you.
Hi, John. It's John. We're always thinking about ways to optimize the investment portfolio and the investment return. I can't give you any specifics, but we're always working on it. So I think we're improving, but we're always working on it.
Thank you.
Thank you. One moment for our next question. Our next question is going to come from the line of Elyse Greenspan with Wells Fargo. Your line is open. Please go ahead.
Thanks. My first question is just on the RBC move in the quarter. And I think the mean reversion change was probably something within the neighborhood of 25 basis points. So were there any other pushes and pulls within RBC? It seems like it might have been stable to slightly up, excluding the mean reversion change in the quarter.
Good morning, Elyse. I think it's closer to 15 percentage points, the $200 million number that I cited, not 25.
Okay, so then anything else you would highlight within RBC away from that?
We experienced some increased normal standardized earnings beyond $200 million, actually around $300 million. Previously, I mentioned the seasonality of the capital charges tied to our fixed business. It's reasonable to consider approximately 20 RBC points a year from the total strain. I believe that number is currently higher, which is positive as we are writing business that should create shareholder value. Strain is a reality in the life insurance sector, necessitating capital when underwriting new business, with cash flow realized over time. Therefore, our strain is exceeding the previously discussed 20 RBC points. However, the seasonal impact I mentioned remains, which pertains to the business risk capital charge for fixed charges. This charge is incurred throughout the year and is then released at the start of a new year. Consequently, in the first quarter, the strain impact will be considerably less than in the following quarters. Thus, there is a seasonal benefit to the RBC resulting from these capital charges.
Thanks. For my follow-up, in previous quarters, you have mentioned actions to enhance value. In the last quarter, you discussed flow reinsurance and other steps taken. Could you share what actions you are currently considering?
Sure. So we did talk about flow reinsurance. We continue to look at reinsurance options, including flow reinsurance. So that still is something that we're considering over time. I think the top priority today would be the simplification of our hedging strategy for our in force VA and first generation Shield business. You've heard us talk about how beginning in July of last year we started to hedge our new product suite, Shield 2.0, on a standalone basis. We extended that to the entire enforced block of our level pay plus Shield products and implemented the modeling associated with that in our financial in our actuarial modeling to realize the full benefit of that standalone hedging for new business. And we've talked about modifying our strategy for this block of enforced VA and first generation Shield. So an underlying goal of that effort is to simplify. I would stress though that we continue to manage to protect our statutory balance sheet. Our hedging position is, again maintaining that up to $5 million first loss tolerance that we've talked about. So we still have significant protection. It's not like a wholesale change and how we're managing the risk, but it is an approach that we are taking to simplify how we're going to address this enforced VA and first generation Shield block.
Thank you.
Thank you. One moment for our next question. Our next question is going to come from the line of Suneet Kamath with Jefferies. Your line is open. Please go ahead.
Great. Thanks. I think on the last call, Ed, you mentioned that you weren't expecting distributable earnings out of BLIC in 2025. Is that still your expectation? And if that's the case, I guess what changes in 2026 to get the distributable earnings going again? Thanks.
Good morning, Suneet. I recall on the last call that I said that our final financial plan anticipated dividends over the three-year period from the operating companies. I don't remember specific comment that I made about BLIC. And I guess I would just say, I wouldn't go beyond what I said last time, which is that our plan over the three-year period contemplates that we will take money up to the holding company, we don't get into specifics about any annual forecast for statutory results.
Got it. I thought you had said something about starting next year, but I get the point that you're making. And I guess…
Maybe I did. I don't recall, but perhaps I did. My point was that I was trying to comment on the three-year outlook for cash flow from the operating companies.
I got it. That's fine. Thanks. And then, I guess, maybe a bigger question for Eric. If I look at your stock price at the end of 2017, it was $58. If I look at where it is now, it's $58. So in seven plus years, we're flat, despite all the buybacks that you've done. And I guess the question, sort of like what I asked last time is, does it make sense to just be part of a larger organization where you can benefit from more capital and more diversification and all those sort of things versus being a standalone kind of annuity writer?
Good morning, Suneet. How are you? And look, my answer is going to be pretty much the same as last time, right? I think last time you commented on complexity as well and look every single day we're dealing with whether it's complexity or capital generation or sales, etc. We're doing our jobs here. We've got a strategy that I think logically can produce shareholder value and so we're just going to keep following that strategy, whether it's sort of from a BAU point of view or when we talk about some strategic initiatives that we have. I talked about last time, I will repeat him because I think Ed kind of listed some of them off from Elyse’s question. But even in addition to what he said there are other sort of value drivers that we can unlock over time and it's our job to do that. So we're just going to keep doing what we're doing. We have bought back about roughly 2.5 billion of stock over the years. And our strategy with the inclusion of strategic initiatives from time to time is unchanged.
All right. Thanks for the answer.
Thank you. One moment for our next question. Our next question comes from the line of Wilma Burdis with Raymond James. Your line is open. Please go ahead.
Hey, good morning. You guys touched on this a little bit with Elyse's question, but could you just give us a little bit more detail on where you are with hedging the legacy block, where you're at right now, what steps you have left to complete? And then I know you kind of touched on this a little bit, but if you could just help me understand what you guys did in July with the new business versus year-end? And just how the kind of new business hedging played out? Thanks.
Sure, Wilma. Let me start with the second question first. When I mentioned standalone hedging, I'm referring to buying a call spread and writing an out-of-the-money put. This option basket creates a payout profile that aligns with what we're guaranteeing our customers. Regarding the first question, we won't provide more details about our activities. One main reason for this is that we manage a substantial derivative book and an extensive hedging program, and discussing our ongoing projects could reveal information that might indicate our future actions in the marketplace. This wouldn't align with the interests of our shareholders.
Thank you. One moment for our next question. Our next question is going to come from the line of Ryan Krueger with KBW. Your line is open. Please go ahead.
Thank you. Good morning. I have one more question about the changes you're making to the hedging strategy. I understand you're simplifying it, but I'm hoping to get a clearer idea of how you expect these changes to practically benefit the company moving forward. What are the intended outcomes, and are you implementing changes gradually, or are you planning to study everything and then make all the adjustments at once later this year?
Yes, so it is more the latter for your second question. So we will decide what we're going to do, we will then implement. So it is not a gradual approach, it is more as you described. I would go back to your first question. I highlighted that an underlying goal here is simplification. So if we look at our block of business, historically, the approach we took managing this block of business with Shield and VA was driven by the capital benefits that we were achieving from writing Shield relative to the offset of VA. That had an inherent level of complexity that was more than tolerable given the clear capital benefit that we were getting. As we have now achieved what we have targeted since the separation, which is a balanced risk profile between the VA block and our Shield block, we have decided that we would like to pivot away from complexity toward simplification. And so that is the overarching goal of what we're doing here.
Got it. And then are you able to give us any perspective on how the VA hedge program performed in the volatility of April?
Sure. We consider various factors when assessing our maximum loss tolerance of up to $5 million. We use a grid that plots the equity market against interest rates. Focusing on the vertical for the equity market, we see that there is minimal impact on the downside up to 30%. However, there is a noticeable impact between a decline of 30% to 50%, which remains below our maximum loss limit of $500 million.
Thank you. One moment for our next question. Our next question is going to come from the line of Wilma Burdis with Raymond James. Your line is open. Please go ahead.
Hey, good morning. Could you just talk a little bit more about your share repurchase program and how it works, given it seems like you leaned in on buybacks in April when prices were low? Thanks.
I'll start. If Ed wants to jump in, he can. In the first quarter, I shared that we repurchased $59 million. Since the end of the first quarter until May 6, we repurchased an additional $26 million. Historically, we haven’t provided forward-looking guidance for some time. Each time, we share what we bought back during the quarter and leading up to the call date. That's what we did in the first quarter and then from that point through May 6.
Thank you.
Thank you. One moment for our next question. And our next question does come from the line of Tom Gallagher with Evercore ISI. Your line is open. Please go ahead.
Good morning. My first question is regarding the $100 million to $150 million of typical capital generation, excluding mean reversion. Was that in line with your expectations? Did the hedges perform as anticipated for both the VA and RILA segments this quarter, within an acceptable range? I am somewhat surprised to hear that everything seems to be under reevaluation from a hedging perspective, especially since you have been working on this for a year. What has changed aside from performance? Have you made further progress on cash flow projections, leading to a desire for improved outcomes? I'm curious why you are reconsidering and trying to simplify an area where you've invested a lot of time already. I would like to understand what’s happening behind the scenes. Thank you.
Yes, let me address your first question. As I mentioned in my prepared remarks, the results align with our expectations. I want to emphasize that our first quarter statutory results were close to our forecasts, and the performance of our hedge portfolio plays a crucial role in that expectation. Regarding the second part of your question, I would refer back to my comments to Ryan. To clarify our timeline, we began discussing hedging new business on a standalone basis during our third quarter earnings call. We also outlined additional steps during our fourth quarter call and have been working on what a revised approach could look like for our in-force variable annuities and first generation Shield, considering the size of those blocks and our more balanced risk profile compared to historical data. I would characterize this situation differently than you suggested; it's not surprising as we've been discussing this. It's not a complete overhaul. For instance, we believe we have strong protections in place for adverse market conditions, which has always been our main goal to safeguard the statutory balance sheet. So, I wouldn’t say it’s a total change; rather, it's an updated strategy that makes sense for our current market context and the mix of business we have.
I appreciate that, Ed. This isn’t about starting from scratch; we want to do something significantly different. Would you say the framework is set, and we’re just making some adjustments, or could there be a more substantial change? I want to ensure I'm completely clear on the message. Thank you.
Yes, this is not going back to the drawing board.
Thank you. One moment for our next question. Our next question comes from the line of Alex Scott with Barclays. Your line is open. Please go ahead.
Hey, good morning. Maybe the first one for you, just on the cashflow projections you've given us over time, and I know you don't have any that are sort of officially out there right now. But I feel like there was a time where we expected these cash flows to really reflect up over time. It seems to be getting pushed out. Is it just keep getting pushing, is it getting pushed out or at this point is it not reasonable to expect the cash flows would inflect up on the in force block? I'm just trying to understand that. And if it's not, what is it that's causing that? Why wouldn't you need to adjust your balance sheet for that if it's not coming up to fruition?
Yes, Alex, you raised several important points. We won’t be discussing cash flow projections until we have them finalized. We have shared some information in the past, and you can draw your own conclusions from that, but creating accurate cash flow projections is a significant undertaking. As I mentioned previously, we are focusing on our strategy for hedging and simplifying processes before we can provide new cash flow projections. This simplification effort is the priority for our finance team and others involved. Given that we are now in May, it's clear that our goal of releasing long-term statutory free cash flow projections by mid-year is no longer feasible. I had indicated in the last call that this might be delayed, and I can confirm we do not have a new timeline for that release. We will not stick to the mid-year expectation we shared earlier. For any other questions you have, it would be best to wait until we present updated numbers, as we won't delve into discussions about previous cash flow projections made two Septembers ago.
Got it. That's helpful. And thank you for entertaining the question. Maybe one that's much more on a positive note. As much as we focus about the in force, you all have talked about the growth opportunities. When you think across RILA, demographic changes, implant annuities and the potential for that to take much bigger share of 401(k) assets over time. I mean, how do you think about the value there and just what you could do with that if you had more capital flexibility? I mean, if Brighthouse had more capital flexibility would it be a game-changer for what you could do in terms of growth into some of those opportunities and how big could those opportunities be?
Hey, I'll start and Myles or David might want to jump in. So far, we've been able to grow everywhere we want to. I don't think we said this. Maybe I said it in my prepared remarks. I can't remember. But March was our highest RILA sales month ever. So, I mean, we're growing well. LifePath paycheck, I think you mentioned, that's going to take some time, obviously. And I've said over and over that the flows will be intermittent, but we certainly expect more this year. And I and others think that the growth possibilities are fantastic potentially. We’re not constrained there. You do have to remember, right? As David said, I thought pretty eloquently, it's about growth, it's about our fabulous distributors, but it's also about pricing discipline. So we were constantly looking at that balance. And right now, I don't feel like we're constrained to grow. We've never once. I have never once. I'm staring at Myles here. Told him you can't sell. He's unconstrained, but we are going to run this company for profitable growth. David or Miles, you want to add anything?
You know that, Eric.
Okay.
Thank you. One moment for our next question. And our next question comes from the line of Wes Carmichael with Autonomous Research. Your line is open. Please go ahead.
Hey, good morning. Thanks for taking the follow-up. I had a question on surrenders in the annuity business. If I look at the AUM roll forward for VA and Shield, that surrender rate, maybe it's consistent quarter-to-quarter, but it's been picking up steam for quite some time. So just hoping you could talk a little bit about what you're seeing? Is that legacy VA? What types of products are surrendering here and would you expect that pace to continue?
Yes, thanks Wes. So, very similar remarks to John's question earlier, but the drivers that we've seen over the last five to six quarters continued in the first quarter of 2025. So we're seeing full surrenders of Shield and VA. And you think about Shield, we have more business coming out of the surrender charge period. Outflows are weighted to VA, continue to benefit from the outflows of the capital intensive legacy blocks. But given the volume of business that we've written, Shield is becoming a larger contributor to the outflows. And from time to time, based on sales volume, fixed annuities as well. So kind of where we think, or where I think about the flows for 2025, at the 2024 level or higher in 2025 is kind of the current expectation and really the difference year-over-year is more business from our fixed annuities coming out of surrender charge and that sort of waited to the second half of the year.
Got it, that's helpful, David. And just last one. I think last quarter there was $1 million or so cash injection into BLIC from the parent. And as we move forward to this quarter, RBC's improved here. I guess would you expect capital that's injected down there to stay down there? It seems like you've got a lot of liquidity at the hold co, but I guess in my mind it always gives you a bit more flexibility if capital is at the top of the house.
Yes, Wes. Hey, I would just go back to what I said, I think, in response to Suneet's question, which is, our three-year financial plan does contemplate dividends to the holding company.
Got you. Thanks.
Thank you. And one moment for our next question. Our next question is a follow-up question from the line of Tom Gallagher with Evercore ISI. Your line is open. Please go ahead.
Thanks. Hey, Eric, just wanted to get your perspective. We obviously have had two recent industry transactions that certainly matter for Brighthouse from a business standpoint on the private side. You would the met VA risk transfer deal, you would the Lincoln partnership announcement with Bain. I'm sure you guys are paying close attention to those. Anything you read into those on, well call it, market pricing points as it relates to private public, anything that informs you on your business risk, market dynamics, anything you can comment on either one of those or kind of in a broader sense what do you think's happening from an industry standpoint? Thanks.
You're referring to the Bain Lincoln transaction and possibly the MetLife transaction. Overall, you're correct that we've been assessing various opportunities for a long time, examining everything in detail. Our management team continually refines our strategy. While I can't go into specifics about the Bain Lincoln deal, it's an interesting and opportunistic move on their part. We analyze transactions like that to consider what implications they might have for Brighthouse in the future. Regarding the VA transaction, I can't comment on specifics, but you're right that we've been evaluating these types of situations for many years without executing a transaction yet. We have engaged in other reinsurance agreements, but I want to emphasize that one block of business doesn't provide a clear picture of larger blocks. It doesn't inform us about our entire block, as it represents just a small segment. Even though similarities existed at the time of our separation nearly eight years ago, many factors, including surrender patterns, have likely changed since then. Therefore, while we're considering all these factors and assessing potential pathways, we have not made any definitive moves yet. I hope that provides some clarity.
Thank you. One moment for our last question. Our last question is going to come from the line of Jimmy Bhullar with JP Morgan. Your line is open. Please go ahead.
Hey, Good morning. So first I had a question on the RBC ratio. I think Ed, you mentioned that the mean reversion benefit was around 15 points on the RBC. I don't know if you quantified the benefit of the lower C4 charge, the seasonal impact. Could you tell us what that was?
Yes. Good morning, Jimmy. I didn't quantify it, but I previously mentioned during the first quarter of 2023 that there was a capital benefit due to the C4 release. You will also see a business risk charge release, and it will be accounted for as you write business throughout the year. While I initially stated that the strain was around 20 RBC points, I would say it's higher than that now. You can take the average number and divide it by four, but I'm telling you that the first quarter is generally going to be quite insignificant from a strain perspective. You will see more in the following three quarters.
And then, I think in the past, your comments about 5 points a quarter and then that coming back sort of implies that it would be a 5, maybe 10 point benefit. But if I'm not off by a lot, is it reasonable to assume that your RBC could drop in 2Q as at least that tailwind goes away, obviously the mean reversion tailwind goes away, assuming normal hedging results, assuming normal statutory results outside of hedging?
Yes. We don't provide annual RBC forecasts, so I'm not going to discuss quarterly RBC forecasts either.
And then just on the strategic initiative that you're thinking about, it seems like capital is not a constraint for growth. So is the reason that you've thought of doing things and some of the actions that you've already taken more to just improve your capital cushion on the balance sheet from a sort of balance sheet standpoint as opposed to accelerating growth? Is that a fair point?
We're doing buttons here, Jimmy. Look, we're trying to unlock capital all the time, and we're going to continue to do that. It helps you eventually remain unconstrained from a growth point of view. So you've seen some of the ones that we've already executed on, and you should expect us to be looking at other things as well. I want to try to stay ahead of the curve so that we can remain, as I already said, unconstrained from a growth perspective, both on the retail side and on the institutional side.
And just lastly, if you look at your evaluation, obviously, the market is concerned about your capital and hedges and other results. You've been on the buying back stock, which implies that you're comfortable with how things are and you're willing to let capital out the door to buy stock at a reasonable price. So for a company that's buying back stock and has been buying back very actively over the past several years, considering the sale at such a low multiple would seem odd unless there was a need for capital and sort of a dire need for capital, otherwise you're capitalizing your business at a relatively low valuation. So what are your views on that? Because I can understand the logic of someone having somebody come in and take a small stake and give you a little bit of more cushion, but exploring the sale of an entire company at a multiple that's so low where you're so actively buying back stock seems a little odd, unless you really need the money.
Hey, Jimmy, it's Eric. Look, I mean, I've already commented now a couple of times during the call with respect to the fact that we have not been constrained with respect to growth since the beginning. And then I'm going to assume that you're asking about some reports in the press. And I'm just going to say, we don't comment on market rumors or speculation, so I'm just going to leave it at that.
All right. Good luck. Thanks.
Thank you. And I'm showing no further questions at this time. And I would like to hand the conference back over to Dana Amante for closing remarks.
Thank you, Michelle. And thank you, everyone for joining the call today. Have a great day.
This does conclude today's conference call. Thank you for participating and you may now disconnect.