管理層發言
Good morning, ladies and gentlemen, and welcome to Brighthouse Financials’ Fourth Quarter and Full Year 2024 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. In fairness to all participants, please limit yourself to one question and one follow-up. As a reminder, this 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 Financials’ fourth quarter and full year 2024 earnings call. Materials 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 would 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, February 12, 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 in 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 statements. And now, I'll turn the call over to our CEO, Eric Steigerwalt.
Thank you, Dana. Good morning, everyone, and thanks for joining the call today. 2024 was a year of successes and also some challenges for Brighthouse Financial. While we made significant strides in our growth strategy last year, our statutory results, as we have discussed over the past few quarters, have been disappointing. However, as we have said before, we have been actively engaged in and continue to make progress on several strategic initiatives designed to improve capital efficiency, unlock capital, and remain within our target combined risk-based capital or RBC ratio range in normal market conditions. I'm very pleased with the progress that we have made on those initiatives, and I'll touch on that in a minute. First, I'd like to take a moment to highlight some of our accomplishments in 2024, including the significant strides we made in our growth strategy. This is demonstrated by our consistent growth in sales of our flagship Shield product suite and fixed-indexed annuity product. Our entrance into the worksite channel with the launch of BlackRock's LifePath paycheck, our continued steady growth in our life insurance product sales, and our launch of the newest iteration of our shield product, as well as enhancements to our SmartCare product suite. Regarding annuity sales, we reported $10 billion of total annuity sales in 2024. In addition, we delivered record sales of our flagship shield-level annuities product suite of $7.7 billion, which is an increase of 12% compared with 2023. As a reminder, our Shield products are what are known as registered index-linked annuities or RILA, and we remain proud to be a leader in the RILA marketplace. In 2024, we also announced updates to our Shield product suite, designed to help our Shield suite remain competitive, adapt to changes in the industry, and reflect our ongoing focus on meeting clients evolving needs. I'm also pleased with the accomplishments we achieved last year in our life insurance business. We delivered steady growth of $120 million of life insurance sales for the full year, which is an 18% increase over 2023. We also launched new enhancements to our flagship life insurance product, SmartCare. Also last year, we joined BlackRock in announcing the availability of BlackRock's LifePath paycheck or LPP solution in defined contribution plans, and we received our first deposits from LPP, all of which is extremely exciting. Last month, BlackRock announced that LPP is now live in six employer retirement plans totaling $16 billion in assets under management, which we're also very excited about. We remain thrilled to work with BlackRock on this innovative retirement solution and expect our involvement with LPP to enable us to reach new customers through the worksite channel. As we've said in the past, expense discipline is extremely important. Therefore, I'm pleased that our full-year corporate expenses were down over 7% compared with last year. Our accomplishments in 2024 reflect an ongoing commitment to the execution of our focus strategy, which I've spoken about before. As you've heard us discuss in 2024, the tremendous success we have had in growing our Shield annuity block of business over the past several years, with our Shield block now making up approximately 30% of our total annuity account value, has created increased complexity associated with managing our variable annuity, or VA, and Shield business on a combined basis. This resulted in a strain in our statutory results last year or in 2024. However, as you have heard us talk about in recent months, we continue to execute our capital-focused strategic initiatives, and we've made significant progress against those initiatives. For instance, as we said in our third quarter earnings conference call, we have made substantial progress on simplifying our VA and Shield hedging strategy. As of the end of the year, we have fully transitioned to hedging all Shield annuity new business on a standalone basis, and we continue to work on revising our hedging strategy for our in-force VA and Shield book, which is now managed as a closed block of business. As a reminder, despite the refinements to our hedging program, the overall focus of our financial and risk management strategy remains the same, which is to protect our statutory balance sheet under adverse market scenarios. Our strategic initiatives also include reinsurance opportunities. As we announced on our third quarter earnings conference call, effective as of September 30th, 2024, we completed a reinsurance transaction with a third party to reinsure a legacy block of our fixed and payout annuities. That transaction helped to create capital efficiencies and reduced our required capital and helped to bring our estimated combined RBC ratio back to within our target range of 400% to 450% in normal market conditions as of September 30th. I'm also pleased to announce that in the fourth quarter, we entered into another reinsurance agreement with a third party to reinsure a legacy block of universal life and variable universal life products residing within our life insurance segment. This reinsurance agreement resulted in additional capital benefit in the fourth quarter. As I mentioned a moment ago, the focus of our financial and risk management strategy remains the same, which is to protect our statutory balance sheet under adverse market scenarios. This is especially important to support our distribution franchise, including our distribution partners and the customers that they serve. As of December 31st, 2024, our estimated combined RBC ratio was approximately 400% at the low end of our target range of 400% to 450% in normal markets. This reflects a $100 million capital contribution made to Brighthouse Life Insurance Company, or BLIC, from the holding company. Ed will provide more detail on our statutory results in a moment. Liquid assets at the holding company were $1.1 billion as of December 31st, 2024. Pro forma for the contribution to BLIC, liquid assets at the holding company continue to be a robust $1 billion. Additionally, in 2024, we returned capital to our shareholders through the repurchase of $250 million of common stock, which included $60 million of common stock repurchased in the fourth quarter. As of year-end 2024, we have reduced the number of shares outstanding by over 50% since we began our common stock repurchase program in August of 2018. Year-to-date through February 7th, we repurchased an additional $25 million of our common stock. As we look toward 2025, we remain committed to further executing on our business strategy and we continue to focus on delivering on our capital-focused strategic initiatives to improve capital efficiency, unlock capital, and remain within our combined RBC ratio target range. To wrap up, I am proud of all that we accomplished in 2024. Despite certain challenges that we faced, we maintained our robust liquidity position and our corporate expenses were down 7% versus 2023, as we also maintained our focus on expense discipline. We delivered record sales of our shield-level annuities product suite, and we received our first deposits with the launch of BlackRock's LifePath paycheck product. We ended the year with an estimated combined RBC ratio of approximately 400% and continue to make progress against our capital focus strategic initiatives. With that, I'll turn the call over to Ed to discuss the financial results.
Thank you, Eric, and good morning, everyone. As Eric mentioned, we contributed $100 million to BLIC effective for year-end statutory financial statements to bring our estimated combined RBC ratio to approximately 400% or the low end of our target range in normal market conditions. Given that it is year-end, which is the only time our subsidiaries officially report an RBC figure. We felt it was appropriate to be in our range. Our combined total adjusted capital or TAC was approximately $5.4 billion at December 31st, which also reflects the capital contribution. Without the contribution, we estimate that our combined RBC ratio would've been in the mid-390s. I would like to make a few comments on the decision to contribute capital to BLIC. First, we have repeatedly stated that we believe our franchise value is driven by distribution and that we are committed to our distribution partners and the customers that they serve. Given the importance of both distribution and the financial strength of our operating companies, we determined it was prudent to make a relatively modest contribution from the holding company to our largest operating subsidiary. Second, we have consistently highlighted the importance of maintaining a conservative position at the holding company, both in terms of cash and capital structure. It is critical to have flexibility to deal with the uncertainty that is inherent in the financial services industry, and our results last year illustrate this fact. After the contribution, we still have approximately $1 billion of cash and liquid assets at the holding company. Finally, while we do not typically provide a forward look on RBC, we're making an exception in this instance, given this is the first time we've contributed cash from the holding company to an operating subsidiary since our early days as a public company. Our financial plan currently anticipates that our combined RBC ratio will be relatively stable over the next few years without additional support from the holding company. As Eric discussed, we made significant progress in 2024 on our capital-focused strategic initiatives designed to improve capital efficiency, unlock capital, and return our combined RBC ratio to our target range and normal market conditions. Keep in mind that while our statutory results benefited from the reinsurance agreement entered in the fourth quarter, as well as us hedging Shield new business on a standalone basis, our VA and Shield business is not immune to large quarterly market moves. Specifically, in the fourth quarter, interest rates were up approximately 80 basis points, as measured by the 10-year U.S. Treasury, and there was a significant steepening in the yield curve. The combined impact of the significant changes in interest rates and the yield curve shape resulted in a negative impact on our annuity statutory results, which contributed to the $300 million decline in TAC in the quarter. As I have discussed in the past, there is an element of timing for market impacts. In this case, there was a current period cost from the movement in rates; however, we would expect to see the benefit from higher interest rates over time. Additionally, there was a net $200 million increase in asset adequacy testing reserves, which contributed to the decline in TAC, driven by legacy fixed annuity blocks. At December 31st, holding company liquid assets were approximately $1.1 billion. Pro forma for the capital contribution, holding company liquid assets are approximately $1 billion. Now turning to adjusted earnings results in the fourth quarter. Adjusted earnings for the quarter of $304 million reflect a $48 million unfavorable notable item, or $0.80 per share, related to actuarial model updates. Adjusted earnings, excluding the impact from the notable item, were $352 million, which compares with adjusted earnings on the same basis of $243 million in the third quarter of 2024 and $189 million in the fourth quarter of 2023. Excluding the impact of the notable item, the adjusted earnings results in the fourth quarter were approximately $70 million, or $1.17 per share, above our average quarterly run rate expectation. Our underwriting margin was approximately $40 million higher than our average quarterly expectation, driven by lower claim volume net of reinsurance in both our life and runoff segments. There was also a benefit of approximately $30 million versus our average quarterly run rate expectation from non-trendable items, equally split among investments, tax, and corporate expenses. Alternative investment income was at the upper end of our long-term expectation of a 9% to 11% annual return, yielding approximately 2.6% in the fourth quarter. This contributed to higher net investment income compared with the third quarter, shifting to results by segment. The annuity segment reported adjusted earnings, less notable items of $327 million. Sequentially, annuity results were driven by higher net investment income, partially offset by a lower underwriting margin. The life segment reported adjusted earnings of $52 million and were higher sequentially, which was driven by higher net investment income and a higher underwriting margin. This was partially offset by higher expenses. The runoff segment had an adjusted loss of $27 million. Sequentially, results reflected higher net investment in income and a higher underwriting margin. The corporate and other segment reported zero adjusted earnings, which reflected a lower tax benefit in the quarter, partially offset by lower expenses sequentially. In closing, we are pleased with our progress on strategic initiatives and believe we have illustrated our commitment to maintaining a strong statutory balance sheet. Finally, we continue to have substantial cash at the holding company. We will now turn the call over to the operator to begin the question-and-answer session.
分析師問答
Our first question is from Wes Carmichael with Autonomous Research. Your line is open. Please go ahead.
Good morning, Ed, I was hoping you could touch a little bit on the drivers of RBC in the quarter. I think it declined if you exclude the capital contribution reinsurance, but maybe you could just touch on, I know you quantified the capital contribution, but reinsurance transaction as well. That'd be great. Thank you.
Yes, good morning, Wes. This is going to be a long answer, but hopefully, it'll help you understand the quarter. There was a lot happening this quarter. We benefited from our strategic initiatives, including the reinsurance you mentioned, the standalone hedging for Shield new business, and some market factors, along with the year-end asset adequacy testing. Starting with the strategic initiatives, if you look at our supplement, you'll see we made some normalizing adjustments for norm stat, and it's a positive number in the fourth quarter, despite the AAT impact. Roughly rounding the math, it shows around $300 million. The actual impact from these positive items is over $400 million, so the benefits we realized from these initiatives are reflected there. There are two main components. First, we talked about hedging Shield new business on a standalone basis starting in July. The key benefit comes when this is incorporated into our statutory modeling. In the fourth quarter, we made the statutory modeling adjustments related to this hedging on a standalone basis, along with our Shield level pay plus product, both the new and old versions. This is important because when integrated into our financial statements, we must consider the future hedges linked to this standalone hedging approach in our liability cash flows, leading to a significant benefit in the fourth quarter. The second positive strategic initiative was the reinsurance deal. We completed a legacy block reinsurance deal for UL and VUL life, which overall improved our RBC by about 10 to 15 points. This contributes to the positive outcome from our strategic initiatives, which, as mentioned, is significant and exceeds $400 million. Regarding norm stat, we reported around a $200 million loss this quarter. I addressed the interest rate impact in my prepared remarks. In norm stat, we had about a $350 million negative impact from rates. Higher interest rates fundamentally benefit a VA block as they lower the present value and future claims, though this is partially offset by reduced bond fund values. In the near term, with rising long rates and a steepening yield curve, we face losses on derivatives that hedge the rate risk and do not capture the full expected benefit from the rate move due to non-parallel movement of the yield curve. The statutory framework is highly influenced by one-year and 20-year rates. The rise in long rates impacted hedge assets more significantly, while the yield curve's non-parallel movement did not positively affect liabilities as much as anticipated. Long-term, the most evident benefit will come from mean reversion point adjustments in the statutory framework for the 20-year treasury. At the end of September, we anticipated two MRP increases over the three-year period. However, based on year-end actuals, we now expect three increases in the MRP, indicating a timing issue associated with rates. Lastly, the asset adequacy testing reserve saw an increase of about $200 million. This relates to a legacy block of fixed annuities with around $8 billion in reserves. This block lacks significant surrender charge protection, and our testing indicated that in high rate scenarios, material lapses could lead to selling bonds at a loss to meet cash outflows. We evaluated conservative scenarios in cash flow testing and determined that the up-rate scenario would result in shortfalls, prompting the $200 million setup. I know that's a lot of information, but I hope you can piece it together for a clearer understanding of what influenced this quarter's results.
No, appreciate it. And I guess my follow up is just on hedging. I know Shield is fully transitioned. Can you just comment on where you are with the legacy VA portfolio and maybe just any update on timing of long-term free cash flow projections would be helpful?
Sure. So, we continue to focus on what our strategy will be for this legacy block of VA and Shield. That is, there's a lot of work that's still underway. This is a very important initiative for us. I want to remind everyone though that our underlying approach to managing this risk has not changed, which is we have a maximum loss tolerance of up to $500 million and we are on a statutory basis and we are focused on relative to CTE98 and we are focused on managing that risk so that there is no issue for market movements and interest rate movements. So, there's no change in managing the risk itself. But we are looking at what is the appropriate strategy going forward for that back book now that we are hedging all our new business on a standalone basis. The long-term statutory free cash flow projections, I think I had a question. Well, I know I had a question last quarter about timing and related to our work on the hedging change, we need to complete the work on what we do with this back book before we would complete those free cash flow projections. So, we said last quarter that we were targeting mid-year; I said that is going to be dependent on the progress we make on this key strategic initiative. And so, I think I would just say we're going to have to wait and see what the timing is. If I had to guess, I would say it's probably going to slip from what I said last quarter, but it's much more important for us to get this back-book hedging strategy factored into those projections than it is to rush getting those projections out.
Got it. Thank you.
And our next question comes from Suneet Kamath with Jefferies. Please go ahead.
Good morning. First question, just on the stable RBC, should we think stable meaning at 400% or somewhere in that range that you target? And then does that outlook contemplate any subsidiary dividends out of BLIC?
Good morning, Suneet. We're not going to provide any more specifics than saying it's stable. You can interpret stable in various ways, but I would say that if it's approximately 400% at year-end and we are aiming to stay within our target range in normal markets, that should give you an idea of what we mean by stable. Regarding dividends, our financial plan does include taking money from operating companies after this year.
I have a follow-up question for Eric. I understand the strategy, but I’m curious about whether it makes sense for this company to operate as a standalone public entity. The reason I bring this up is that Ed just spent a considerable amount of time discussing the quarterly changes in RBC, highlighting the complexities involved. This seems to add a level of confusion that we don’t see with other companies, which are more diversified and have various businesses beyond just annuities. How do you view the complexities you face in light of the possibility of not being public in the future? Thank you.
You got it, Suneet. You broke up a touch there, but I think I got it all. Look, we've been dealing with complexity for seven and a half years now. There have been a number of periods where that complexity has been far less. Recently, as we've discussed, and whether it's part of Ed's answer here or answers we've given in the past, when we ended up with as much Shield on the books as we were hoping for to sort of balance the old VA book, that created an interesting situation for us. And I would agree that that situation not only sounds complex, but is complex. And so, what we've done is broken it apart into, essentially two pieces. I'm overly simplifying here. One, for all Shield new business to be hedged on a standalone basis. And then two, as Ed's previous answer sort of illuminated, figuring out how we're going to hedge what I called previously kind of a closed block of VA and older Shield. So, when we think about what we've got to do to manage this complexity, some years it's been far more simple. This last year, 2024, I agree, it was complicated. And so, whether it's running the company as efficiently as we can on sort of a BAU basis, right? Everything that we do on a normal basis to run this company. And then adding in these strategic initiatives, whether it's things like reinsurance, other initiatives that we're thinking about, we're always trying to think of new initiatives, or the fairly large initiative associated with the hedging program. We are a public company, and we're running this company every day to, over time, create long-term shareholder value. Even as you think about it, we're roughly at year seven and a half. We've repurchased $2.5 billion of stock, and that adds up to more than 50% of the original share's outstanding. So, all I can tell you is we're going to continue to run the company as we have. And when you do hit periods of complexity, you just power through it, which is exactly what you've seen us do over the last couple of quarters, including the fourth quarter. And that won't stop as we go through 2025.
Okay, thanks for the answer.
Thank you. And one moment as we move on to our next question. And our next question is going to come from the line of Wilma Burdis with Raymond James. Your line is open. Please go ahead.
Good morning. Could you provide a general overview of what has been contributing to the normalization of debt losses in the most recent quarters? Is it related to RILA in stronger equity markets or hedging on traditional VAs? Please share your insights.
Good morning. We've discussed various factors related to the usual market volatility, which we've addressed in previous quarters and can recap for you. Another point we've raised is the pressure from new business, which led us to adjust our hedging strategy. With the balance we've achieved in our risk profile between VA and Shield, we found that the benefits from our previous management approach were diminishing, necessitating a change. As a result, there was additional strain observed in 2024, which we do not expect to continue for a couple of reasons. First, the new hedging strategy we are implementing, and second, our exploration of flow reinsurance for Shield new business, which should help ease capital strain. We are actively pursuing this initiative and have multiple parties interested in such a deal, so it's good to keep that in mind as an important effort we're working on this year.
Okay. Are there additional opportunities to expand the portfolios? If so, can you provide details on the capital required for that? Also, you've done well with expense management this year. Is there further room for cuts to enhance organic cash flow generation?
Wilma, it's John. Yes, there are likely opportunities to increase yield. Overall, our portfolio allocation has remained fairly stable throughout the year. We still maintain a risk-off approach. We invest across all fixed-income asset classes. Since spreads are tight, we don't see any strong reason to concentrate on any particular sector, but we are ready to take advantage of widening spreads and market dislocations if they occur. Eric, do you want to add anything to this?
Yes, I'll take the second half, Wilma. Yes, we had a good year with respect to expenses in 2024, expense is down 7% year-over-year. As I've said over the years, actually, my real focus is on the expense ratio, right? So, keeping that expense ratio down, has been a focus, frankly, since day one, and that was a long time ago. We're not afraid though, to invest in growth. So, I would just sort of say, Wilma, as you think about 2025, certainly, there are inflationary effects out there, and they will affect all companies, including ours. But my real focus is to grow revenues sort of faster than our expense margins. And I expect that to continue in 2025. So, the expense discipline is alive and well.
Thank you. And one moment as we move on to our next question. And our next question comes from the line of Jimmy Bhullar with J.P. Morgan. Your line is open. Please go ahead.
Good morning. Ed, could you or maybe Eric share your outlook on the company's RBC ratio? If it remains around 400%, should we expect any additional measures like insurance to increase it further for a safety margin, or are you fine maintaining it at that level?
Good morning, Jimmy. To start, we're comfortable operating at 400%. Under normal market conditions, our typical range is 400% to 450%. Over time, as our mix changes, we could see that range decreasing, though I'm not suggesting this will happen in the near term; it makes sense considering the evolving risk profile of the company. Additionally, we are always searching for ways to unlock capital, which has been a consistent effort for us over the years. We have various strategic initiatives underway, including our approach to the back book of VA and Shield, and any further reinsurance we might pursue. We believe these efforts will enhance capital efficiency and potentially unlock more capital, which is why we remain focused on these initiatives.
Hey, Jimmy, it's Eric. I'll just add a little bit because I think it's a good question. So, remember, you know this very well. You've got the interplay between what's your capital level at your insurance subsidiaries, especially BLIC, and then when you got the holding company. And of course, we still got $1 billion up at the holding company. And Ed and I have talked about that for years. We always felt that was prudent and we still think it's prudent, obviously. But yeah, we can run at 400%. You've got the liquidity of the holding company. And we've never pushed money down. But we just thought, as you heard Ed say, I don't know, maybe 20 minutes ago, that it just made a lot of sense to get the RBC ratio at the end of the year within the range. It's really helpful for distributors. And I like helping our distributors. So even after we did that, we still got $1 billion up at the holding company. And as you heard Ed say, we do in our three-year plan expect to have dividends up to the holding company. So yes, we are comfortable.
And just on the dividend point, are you expecting dividends every year, or was that more of a cumulative comment?
That is more of a cumulative comment. I think, as we've done in the past, we prefer to talk about any forward-looking metrics on a multi-year basis rather than any single period.
Okay. And then on fixed annuity sales, they were down this quarter, a decent amount. So is that because of competition or something from distribution or just a desire to sort of preserve capital. Can you talk about what drove the decline there?
Good morning, Jimmy, it's Myles speaking. So, FIA sales were down for the year as expected. As a reminder, midyear, we had a transition into a new reinsurance partner. Our FIA sales were up for the year, driven by our successful launch of our SecureKey product. On a combined basis, we exceeded our expectations for fixed sales but we continue to balance growth, pricing discipline and managing capital, and we're happy with our overall results.
And our next question comes from the line of John Barnidge with Piper Sandler. Your line is open. Please go ahead.
My question is on the investment management of the portfolio. How much expense is there associated with the outsourcing of that?
John, it's John. We don't really provide that. We provide an overall investment expense number. You can see in our financials and you can assume that IMA type fees are the majority of that.
My follow-up question. How much outsourcing is concentrated in the most hands as a percent basis, I'm not looking for who?
We have about twelve outside managers that we trust, who are exceptional and have the capabilities we need across different sectors. I don't think it's necessary to disclose how much money each one manages.
Our next question comes from the line of Ryan Krueger with KBW. Your line is open. Please go ahead.
Thanks. Good morning. I guess a question on reinsurance. So, you've done a couple of in-force deals. I guess when you look forward, are you still looking to do more things like that and I guess, would you broaden the scope to also perhaps include some of the liabilities, the SUL liabilities in BRCD as well?
Good morning, Ryan. In response to Jimmy's question, I mentioned that we are always exploring ways to act responsibly from a capital perspective. If pursuing additional transactions makes sense for us, we will proceed accordingly and evaluate all options. So far, we have completed some legacy blocks, including the annuity block we discussed last quarter and the life deal involving UL and VUL this quarter. We have primarily focused on straightforward opportunities, which, while requiring a significant amount of work, were relatively manageable. However, as we consider other businesses or legacy operations you mentioned, we anticipate greater complexity, which will require more effort, but it is something we have been contemplating.
And then going back to the stable RBC comment. Over the next few years, I think there's some different moving parts over the next few years when you, I guess, on your own company-specific side, the change to the hedging of the closed block of variable annuities and Shield, and then you have some changes going into effect, I think are on pace, scheduled for next year on variable annuity capital and reserving requirements. I guess, have you tried to contemplate all of these moving parts into that forward outlook already or give any thoughts there?
Sure. So, you highlight two areas that will create some level of uncertainty about what the framework will look like. Most, I would say in particular, you're referring to the upcoming change in the economic scenario generator, which is scheduled at this point for the 2026 financial statements, correct? That's what you're asking about.
That was part of it. I also think your adjustments to the legacy hedging play a role.
Those elements are not included in my comments because, first, it's impossible to determine what the final framework for ESG will be. I would argue that if a very conservative economic scenario generator is implemented, a higher RBC ratio may not be necessary. This is one perspective to consider; if you're reflecting much of the risk in your current balance sheet, the capital cushion needed for adverse deviation should be less. That aspect is not part of my remarks. To emphasize, I believe everyone on this call understands that our expectations for the RBC ratio will be influenced by normal market conditions. Looking at our financial plan, we anticipate a moderate scenario moving forward—slightly below normal market returns and slightly above normal credit losses, but nothing significant beyond typical market conditions. This is why we describe our approach as stable. A different market environment would yield a different RBC ratio outcome, either positive or negative. Regarding the hedging aspect, a major aim of our efforts is to simplify our processes. While it will never be completely simple, as you probably gathered from my lengthy response to the initial question, we aim to make things clearer. Therefore, we might consider a capital impact for a clearer risk management approach if it seems appropriate. I’m not indicating that this will happen, just that it’s a potential trade-off we may consider, which isn't covered in what I've discussed about the stable RBC ratio.
Our next question is going to come from the line of Nick Annitto with Wells Fargo. Your line is open. Please go ahead.
Good morning. Maybe just more of a high-level question, maybe for Miles or David, but can you just comment on the kind of competitive environment or dynamics in the RILA business? It just seems like a lot of companies are already in it and starting to launch newer refreshed products would be good to get your kind of near-term or intermediate-term outlook on it?
It's Myles. I'll take it, and David can certainly chime in. But look, there's a lot of demand for these products in the marketplace. Customers are looking to stay invested with protection. They're focused on retirement planning. So, the market has expanded quite a bit. It's expanded as it relates to new distributors selling these products. There's a lot of new features on these products, including income riders. But we feel really great about our competitive positioning. Last year was our best year yet as it relates to Shield sales. And we continue to do a number of different things to enhance our offering, whether it's Shield Level Play Plus, which is Shield with an income rider or a Step Rate Edge, which is a new crediting strategy. David, anything you want to add on that?
No, I think you covered it.
Our next question comes from the line of Tom Gallagher with Evercore ISI. Your line is open. Please go ahead.
Good morning. I have a couple of questions. Regarding the stable RBC, should we interpret that to mean you'll have positive statutory earnings but an increase in required capital? That's my first question. Also, do you anticipate proceeding with share repurchases, which will likely depend on drawing down HoldCo excess in the near term?
Tom, so I don't want to go too far down the path of this forward-looking plan topic. But the answer to your question is yes, it does assume that the results over the plan period would be positive earnings.
Yes, he's pointing at me, Tom. Look, generally, as Ed just said and as you know, we don't talk about share repurchases going forward. We just haven't done that. All I can do to help you out is point to history, which is pretty consistent. And as I mentioned, I'm not sure on whose question; maybe Jimmy's, over our history as a public company, has added up to repurchases of north of $2.5 billion.
Got you. For my follow-up, could you provide some additional details on the risk transfer deals you completed, specifically the annuity deal? What were the deposit sizes for those fixed annuities and how much were the payouts on the annuities? Additionally, can you share how large the life deals were, perhaps in terms of reserves or insurance in force?
Hey, Tom. I'm not sure how deep I want to go into the reserves for the life deal since we are still exploring other opportunities. Earlier, in response to Wes's question, I mentioned that you could probably assume 10 to 15 RBC points, which is based on the numerator of the calculation. You can do some math to estimate a range, but I won't provide more specifics on that. Could you repeat your question about the annuity side?
Yeah, just the size of the 3Q annuity deal. How big were the assets or deposits on those?
Yeah, it was approximately $8 billion.
Can I just sneak in one more just from a standpoint of BRCD?
I would expect nothing less, Tom.
Hey, I'm at the end of the chain here. So, I'm doing my best. But anyway, the BRCD, is there any way you can frame that? Because I think investors are trying to figure out, is that still a source of value? It certainly has been in the past. Because when I look at the $5.4 billion of TAC and BLIC and NELICO, I think there's also some additional value from BRCD. Do you have a surplus number that's back in the $24 billion of SUL reserves? Or do you really just fund the reserves?
Yes, it's more of the latter. To address your question about BRCD, we've taken $1.2 billion in dividends from BRCD, and done so on two occasions. Each time, we required regulatory approval since all dividends from BRCD are classified as extraordinary. We successfully demonstrated that it was suitable to withdraw those funds. I want to emphasize that I do not see BRCD as a continuing source of capital for Brighthouse. It is appropriately capitalized but constitutes a runoff block of old business. Therefore, I don't view it as a source of extra cash for BLIC or the holding company.
Thank you. Ladies and gentlemen, I will now turn the call over to Dana Amante for closing remarks.
Thank you, Michelle. Thank you, everyone, for joining today's call, and have a good day.
This concludes today's conference call. Thank you for participating, and you may now disconnect.