Outlook is ‘stable’
September 07, 2018 — OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” to the recently priced $375 million 6.25% junior subordinated debentures due 2058 for Brighthouse Financial, Inc. (Brighthouse) (headquartered in Charlotte, NC) [Nasdaq: BHF]. Concurrently, A.M. Best has assigned indicative Long-Term IRs of “bbb+” to senior unsecured debt, “bbb” to subordinated debt, “bbb-” to junior subordinated debt and “bbb-” to preferred stock, to Brighthouse’s recently filed universal shelf registration. The outlook assigned to these Credit Ratings (ratings) is stable. Brighthouse’s Long-Term Issuer Credit Rating of “bbb+” and the ratings of its operating insurance subsidiaries are unchanged.
A.M. Best expects the debt issuance to increase cash and liquid assets at the holding company level, which exceeded $500 million prior to the debt issuance. However, A.M. Best notes that Brighthouse recently has been authorized to repurchase up to $200 million of common stock over the next 12 months, which will be funded by existing cash at the holding company and is not expected to impact risk-adjusted capital at the operating insurance companies.
Volatile Operating Results No Great Concern
Brighthouse’s adjusted financial leverage is just below its target level of 25% and well within A.M. Best guidelines for its current rating. This includes the option for the underwriters of the debt offering to purchase up to an additional $56.25 million until Oct. 5, 2018. While operating results have been somewhat volatile in recent periods due to establishment costs, some fluctuations in mortality and expenses associated with its spin-off from MetLife, Inc., A.M. Best expects interest coverage to remain in the mid-single digits over the near-term.
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