Brighthouse Financial , Inc. (NASDAQ:BHF) announced today the upcoming departure of its Chief Accounting Officer (CAO), Kristine H. Toscano, and the appointment of Richard Cook as the interim CAO, effective November 9, 2024. Toscano will be leaving the company on November 8, 2024, to pursue a new opportunity. Her departure is not related to any issues with the company's financial statements, disclosures, or accounting practices.
Cook, currently serving as Brighthouse's Investment Controller, will assume the role with a new compensation package, including an annual base salary of $300,000 and a target annual short-term incentive opportunity of 45% of his base salary. Additionally, he will be eligible for equity awards with a target value of $135,000, subject to the company's performance and other plan terms.
In other recent news, Brighthouse Financial has been under the microscope due to its financial performance and analyst ratings. The company reported strong adjusted earnings of $346 million or $5.57 per share in its second quarter 2024 earnings call, boosted by record Shield annuity sales. However, Brighthouse's Risk-Based Capital (RBC) ratio, a key measure of solvency, fell below its normal target, raising concerns about its financial resilience.
Barclays initiated coverage of Brighthouse with an Equalweight rating and a price target of $48.00, highlighting uncertainty regarding the insurer's cash flows despite favorable market conditions. This followed a downgrade from Wells Fargo, which lowered its rating from Equal Weight to Underweight due to heightened sensitivity to economic factors.
Brighthouse is actively working on several initiatives to improve its capital efficiency and restore the RBC ratio to its target range within the next 6 to 12 months. These strategies include potential reinsurance transactions, which Barclays noted could improve Brighthouse's capital position and advance future cash flows.
The company also plans to maintain a strong balance sheet and continue its share repurchase program. In addition, Brighthouse expects increased BlackRock (NYSE:BLK) flows in the fourth quarter and is open to considering opportunities for external partnerships related to LifePath Paycheck.
InvestingPro Insights
As Brighthouse Financial (NASDAQ:BHF) navigates this leadership transition, InvestingPro data provides additional context to the company's financial position. Despite the recent announcement of the CAO's departure, InvestingPro Tips suggest that management has been aggressively buying back shares, which could be seen as a vote of confidence in the company's future prospects.
The company's financial metrics paint a mixed picture. With a market capitalization of $2.72 billion and a price-to-book ratio of 0.66 as of the last twelve months ending Q2 2024, Brighthouse Financial appears to be trading below its book value. This could potentially indicate an undervaluation, especially considering that InvestingPro Tips indicate that net income is expected to grow this year.
However, it's important to note that Brighthouse Financial has not been profitable over the last twelve months, with a negative gross profit margin of -36.69%. This aligns with another InvestingPro Tip highlighting that the company suffers from weak gross profit margins. On a positive note, analysts predict that the company will return to profitability this year, which could be a turning point for Brighthouse Financial's financial performance.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. There are 7 more InvestingPro Tips available for Brighthouse Financial, which could provide valuable guidance during this period of executive transition and financial recovery.
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